Nigerian Television Authority is a television broadcasting company. It claims to run the biggest television network in Nigeria. The company has stations in several regions in Nigeria. Presently, the company is known as Nigerian Television NTV (Nta.ng, 2014). The company had started in the year 1977. The television company has been widely viewed as an authentic voice of the Government of Nigeria. An editorial posted in Guardian on October 18th, 2009 stated that it is one of the largest television companies in Nigeria (Broadcasting In Nigeria: Unlocking The Airwaves, 2001). The company lacks operational freedom in order to maximize their potential. Prior to mid 1990’s the company was a monopoly in Nigeria. But with the establishment of privately owned television stations and networks i.e. African Independent Television, the company received competition and they had to revise their content. The programs of NTA can be viewed online via the Africast as well as they can be viewed in TelAfric television (US and Canada). The news bulletin of NTA is aired frequently on the African Independent Television and the Ben Television based in United Kingdom. The organization is inventing strategies to reposition NTA for better delivery of service so that it can bring innovation in the area of presenting news and programs. Apart from being one of the largest media and broadcasting network in Nigeria, NTA creates opportunities of employment in the economic situation in Nigeria. The decline in the purchasing power of the Nigerians has adversely affected the television usage (Placng.org, 2015).
The report discusses the management accounting strategies applied by NTA. The process of budgeting, management accounting information system, process of costing , capital decision making process and the capital acquisition process and capital structure has been discussed.
The National Broadcasting Commission controls the broadcasting and media operations of the country. It is responsible for receiving, processing the applications, broadcasting using direct satellite and other medium of broadcasting. It regulates the broadcasting industry. The budgeting process of Nigerian Television Authority includes budgetary allocation that has been made by the Commission in the annual budget of the company (Cislacnigeria.net, 2007). The sources of revenue for the Nigerian Government are internal and external in nature. The internal sources of revenue comprises of the fines, taxes, rates and fees. But the Nigerian Government mostly depends on the allocation grant from the Federal Government for its survival. The budgetary cycle is a lengthy procedure. It should be made more proactive and responsive in nature. The process of budgeting involves analysis and monitoring tracking and evaluating the allocation of the resources. Zero based budgeting process is followed by the organization. This approach is based on planning and decision making that is different from traditional form of budgeting. The zero-based budgeting requires re-evaluation of the budget. The process of budgeting is independent in nature and the specific items in the budget are either increasing or decreasing. This process of budgeting has resulted in efficient allocation of the resources which is based on the need and benefits rather than the history. It is important for the organization to prepare the sales budget in advance in order to review the profitability of the company for the particular year (Iyagba & Anyanwu, 2012). The breakeven point is calculated on the basis of the budget. The latest financial reports of the company are continuously scrutinized and analysis is done to ensure that the company is able to attain the break even. The budget is prepared with the purpose of meeting the short term objective. The approach of budgeting is authoritarian in nature. The company suffers from dilemma if its profit target is not met. The financial position of NTA can be understood deeply with the understanding of the budget of the company. The process of budgeting for NTA depends on the funds allocated to the local government. The local government will allocate money for NTA on the basis of the funds arranged by the Government. It is can be said that NTA can apply the lean approach of accounting. This approach of accounting will simplify the financial reports and it will highlight the areas that require attention. In order to facilitate the approach, training has to be provided to the managers responsible for preparing the budget (Adeyanju & Okwori, 2015). The budget can be a monthly flexible form of budget (Wadsworth/Thomson Learning, 2002). This will maximize the operational efficiency which is required for fine tune decision making of the organization. The sales figure has to be monitored on a regular basis to identify the future profitability of the organization. If the predicted sales are not materialized, it will result in decline in the financial performance of the company (Shah, 2007). In such cases the government has to provide additional financial assistance to the company so that it can revive from its financial position (Mccue, 1999).
The management accounting information system helps the organization in streamlining the various accounting process of the organization. The organization can monitor its cost and expenses by using MIS. Management accounting information system is used by NTA to store and process the financial and accounting data of the organization. The accounting system is a computer based system which is used to track the accounting activity of the organization. The management accounting information system is used to prepare the statistical reports that can be used internally by the management for the purpose of decision making. NTA uses the management accounting information system for external usage for the investors, creditors and the tax authorities. The managers at NTA uses the top down approach so that the cost can be kept at minimum. The information at the managerial level is not shared with other divisional managers. Excel is used for the preparation of the financial statements. The financial accounting information is used to monitor cash flow, creditors, debtors and preparation of general ledger. The data prepared by the accounting information system is distributed throughout the entire organization. Excel is used to prepare the budget and calculate the profit and loss of the organization. The accounting information will help to provide the data to the users of the organization. The confidential information is available only to the CEO and financial manager of the organization. The costs are generally controlled by the top management of the organization. They are responsible for controlling the expenses and the revenue of the organization for each department. The employees are trained on a regular basis to monitor the accounting information system. The broadcasting department is responsible for monitoring the costs and revenue on a regular basis.
NTA can use the lean approach of accounting. This will aid the manager of the company to take decisions appropriately that will be helpful for creation of value to the customers. The managers have to work in collaboration for the success of the MAIS system. Improvement of the systems will improve the productivity and lead to reduction of the costs. This will enhance the flexibility. The transparency of the organization should increase so that the major information is available to the share holders. The managers should utilize the resources efficiently. The wastage of resources could be avoided by efficient planning and use of accounting information system. This will provide access to the entire financial information. The cost savings would increase the profit margin of the company and the sales can increase by efficient planning process. There are certain drawbacks to the implementation process. It is considered as a process which is time consuming. In the lean approach, the number of reports prepared is more so the time consumption is more. It is one of the traditional forms of accounting that is used by the accountants to produce the information periodically. The accounting information system is used to reduce the time period of work and increase the efficiency of the organization (Ibraheem Diso, 2005).
The broadcasting industry of Nigeria is currently undergoing revolution. The broadcasting industry uses the digital technology. The technological innovation in the form of digitization has changed the scope of the television and radio industry in Nigeria. The method of costing applied by the Nigerian Television Authority is absorption costing method. The method is applied for the calculation of cost across various departments of the organization (Innes, Mitchell & Sinclair, 2000). There are various slots for the programs to be forecasted on the television. If one of the slots remains unsold then it is considered as wastage of money. Costing method is applied to the time slots (Agboli & Christian Ukaegbu, 2006). There are fixed costs and variable costs for calculation of the costs of the slots. The apportionment is done on an equal basis. The apportionment does not depend on the staff number, the amount of space that has been utilized or the variable costs that are related to the divisions (McGowan, Holmes & Martin, n.d.). The cost incurred by the organization bears direct correlation with the pricing of the advertisements. This is done by calculating the breakeven point. It is calculated by the organization so that they can calculate the revenue generated by selling the news (Falodun & Ajewole, 2006). The focus of activity based costing is on the cost drivers. The activity based costing identifies the costs that have increased (van Triest & Fathy Elshahat, 2007). The traditional form of activity based costing used to focus on the drivers that are volume based which includes the number of labor hours while the new approach of activity based costing uses the transaction based drivers. The costing of each slot is done using activity based costing in NTA (Adediji, Ajewole & Falodun, 2011). The activity based costing method is an accurate method of costing that lead to decisions of pricing that are more accurate than other forms of costing technique. The understanding of overhead costs and the cost driver’s increases (Atkinson & Cornwell, 2011). NTA uses the activity based costing method so that it can monitor the operating costs so that the overhead costs can be avoided. The performance of the management can be monitored for the improvement of the operational process of the organization.
The activity based costing approach apportions the various costs equally. This will help to identify the areas which results in loss of NTA. Since the media industry is a labor intensive industry with high cost of overhead it is suitable for the organization to use the activity based method of costing. This will assist the organization in the process of decision making and reduce the cost of the organization.NTA will be able to identify the news that is not generating any profit for the organization. The news which is not generating any profit can be either modified or they can be stopped permanently. This will reduce the expenditure of the organization by controlling the operation costs. The activity based costing method has helped NTA to identify the areas which are creating loss for the organization so that the resources can be managed in an efficient manner.
Digitization has been the current trend in the broadcasting industry in Nigeria. The entire broadcasting industry in Nigeria is getting digitized (Guilding, 2003). Thus the capital decisions at NTA are based on digitization of the broadcasting stations. The capital decisions of NTA are based on making investments in digitization. The migration of the Nigerian media to the digital broadcasting is considered as a mirage (Smith, 2012). The digital television signals are more clear and strong. The audio and the video output are much stronger. NTA has embarked on this process of digitization by the installation of the transmitting equipment throughout the country. The installation of the digital media is imperative as without its installation the customers will not be able to receive the signals of television and they will not be able to view the news broadcasted in the NTA channel. The cost of the transmission equipment is high. The increase in the cost of the company has been calculated using capital budgeting techniques. While analyzing the investment decision, the depreciation and rate of interest are calculated. The capital budgeting process has helped to identify the profit and the risk from the investment. This method can be considered as a good appraisal method. The organization can implement strategies to minimize the risks from investment (Bierman & Smidt, 2012). With the change in the rate of interest by the Government there will be change in the investment decision by NTA.
NTA can use the methods of capital budgeting like NPV, Payback period, IRR to calculate the risk and gain from the investment. This will increase the feasibility of an investment decision. The calculation from NPV will help to avoid a very costly mistake. The risk of making huge loss in a certain investment can be easily avoided by NTA. NTA will be able to take decisions on loan and other investment decisions using the methods of capital budgeting. The method of capital budgeting can be used to analyze the investment decisions. It will help to choose the investment option which is most feasible. The company can generate profits by investment in the transmission equipments that will result in profitability of the organization. NTA will be able to compete with other organizations using digital technology. This will increase the efficiency of the organization. The viewers will be able to view the channel using digital technology. The various slots of the shows of the company will generate enormous profit.
Nigerian Television Authority has undergone several merger and acquisition to improve the financial position of the company. With the establishment of the NBC (Nigerian Broadcasting Corporation) , the television media was under the scrutiny of the broadcasting corporation. In the year 1977, the state run television broadcasters had merged itself with the rebranded name known as Nigerian Television. At the present context NTV is owned by the Nigerian Television Authority. NTA has opened several branches and network centers in the country. The channel receives funding from the government. The Government arranges funds from the banks and other investors (Haynes, 2000). They invest in the broadcasting channel. The Government has spent lump sum amount for the digitization of the broadcasting media. The competition in the broad casting business is increasing with the privatization of the industry. There is entry of competitors of the company which has affected the sale of the shows shown at specific time slots. In such as situation aid from the Government is essential to promote the business. The growth of the business will improve the financial position of the company (Adesokan, 2009). It can invest in new projects. For this purpose NTA has entered in to merger and acquisition to increase its business.
The proportion of debt and equity in the business defines the capital structure of a company. NTA is a run by the State Government of Nigeria. The owner of the company is the Federal Government. There are generally two forms of capital which is the equity capital and the debt capital. Except for the organizations that are funded by the Government, the company can make choices of their capital structure. In case of Government organizations, the managers can decide whether to increase the proportion of debt or equity of the organization. The profitability of an organization is based on the capital structure and the allocation of the costs of the business. NTA is a Government funded organization. The Government is dependent on funds from the investors for making the investment decisions (Oyeleye, 2004).
Sourcing cash may be finished an assortment of reasons. Conventional territories of need may be for capital resource securing - new hardware or the development of another building or station. The improvement of new items can be hugely exorbitant and here again capital may be needed. Regularly, such improvements are financed inside, though capital for the obtaining of apparatus may originate from outside sources. In this day and time of tight liquidity, numerous associations need to search for fleeting capital in the method for overdraft or advances with a specific end goal to give an income pad. Investment rates can differ from association to association furthermore as per purpose. Ordinary shares are issued to the holders of an organization. The business estimation of a cited organization's shares bears no relationship to their ostensible quality, with the exception of that when customary shares are issued for money, the issue value must be equivalent to or be more than the ostensible estimation of the shares. A rights issue gives a method for raising new impart capital by method for an offer to existing shareholders, welcoming them to subscribe trade for new experience for cold hard currency extent to their current possessions (Bernardo, Cai & Luo, n.d.).
An organization making a rights issue must set a value which is low to such a degree as to secure the acknowledgement of shareholders, who are being asked to give additional stores, yet not very low, to keep away from unreasonable weakening of the income every share. Preference shares have an altered rate profit before any profit is paid to the customary shareholders
NTA is Media Company in Nigeria run by the Government. The media company is run by the Government. The implications of the finances i.e. the proportion of debt and equity are arranged by the Government. The Government arranges funds from various sources which include the issuing of ordinary and preference shares and rights issue. NTA was running as a monopoly organization till the introduction of privatization in the media sector. The private media companies have increased the competition of the organization. There has been considerable rise in the pressure on NTA to maintain the standards. The company has to undertake certain investment decisions to increase the profit margin. Digitization has captured the market of the media sector in Nigeria. Thus it is important for NTA to innovate themselves towards the path of digitization. The digital media has simplified the process of working of the organization. The audio and visual media is available to the public in a much polished manner. Thus it has been imperative for the organization to invest lump sum of money for the process of digitization. This has increased the profit of the company. The shows shown in particular time slots are becoming popular. NTA has used activity based costing to calculate the costs and expenses.
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