1.0 INTRODUCTION
1.1 Background
of the study
1.2 Statement
of problem
1.3 Objective
of the study
1.4 Research
Hypotheses
1.5
Significance of the study
1.6 Scope and
limitation of the study
1.7 Definition
of terms
1.8 Organization
of the study
CHAPETR TWO
2.0 LITERATURE
REVIEW
CHAPETR THREE
3.0 Research
methodology
3.1 sources of data
collection
3.3 Population
of the study
3.4 Sampling
and sampling distribution
3.5 Validation
of research instrument
3.6 Method of
data analysis
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS AND INTERPRETATION
4.1 Introductions
4.2 Data analysis
CHAPTER FIVE
5.1 Introduction
5.2 Summary
5.3 Conclusion
5.4 Recommendation
Appendix
Abstract
The accountants the business and the economy are
inseparable. They are mostly needed in resolving various conflicting investment
decision, initiating and co-ordinating meaning of economic development and
growth. In Nigeria, this function has largely been restricted to the reporting
role, book-keeping accounting and auditing. This research project is thus a
search part for what the role of the accountant, has been and what it should be
in enhancing economic development in the area of company formation and
profitable business acquisition. Moreover in this period of high business
mortality rate, what the role of the accountant in corporate rescuer should
be.Chapter one of the study lays a theoretical framework for subsequent
chapters. Following the general
introduction, the problem statement and the objective of the study which
provided basis for the significance of the study and the hypothesis were
stated. The limitation of this study were also highlighted. In the literature
review as contained in chapter two, works of various authors, international and
local journals were reviewed to elicit views on the roles and relevance of the
account in business and economic development.
CHAPTER ONE
INTRODUCTION
Background of the study
The public accountant is an independent practitioner who
works on a gee basis for business management or for individuals wishing to use
his services or as member of an accounting firm. Most public accountants are
also external authors. The commonly known services offered by the public
accountant include the following:
Those that are substantially of auditing nature
Those who involve primarily accounting
Those pertaining to taxes.
Most people perceive the roles of the public accountant as
being limited to the traditional one balance sheet in the process of auditing
the financial statements of companies. The have failed to realize and
appreciate that the public accountants provides services in respect of problems
relating to conceptualization of business ideas, formation, registration and
development of business most importantly on how to do with the collection and
presentation of accounting data. They also undertake routine book-keeping for
enterprises without adequate book-keeping personnel. Very often, the accountant
is consulted with respect to income tax implication of proactive transactions.
In his contribution, Okugi said consultant of his client, the task will be more
cost effective and efficient. Hence, he will be able to make comprehensive
report to avoid as much tax as possible and avoid unnecessary duplication. C.A.
Okafor see the designing of accounting systems for clients as one of the
frequently ignored aspects of public accounts in Nigeria. The public accountant
helps in the planning stage of company preparing feasibility studies, writing
the expected financial flow-making realistic projections and determining the
cost implication of intended projects. He also co-ordinates and uses the input
from other professionals to compute, analyze and expose the financial
implications of the entire line of action. Nnam added that the accountancy
firms perform appraisal of investor to determine their viability and
profitability and to check the stability of expected cash flow. The public
accountant drafts the Articles of Association, memorandum of Association and
formulates the internal policy of the firms. These documents are then filed
with the Register of companies. He can also help in the preparation of budget,
business plan and installs control systems and procedmes that generate
necessary data from which information needed by business if processed. In same
circumstances, a new or existing company may rely on the public accountant for
recruitment of some specialized manpower or he can send his staff on recommendation
to a new business for specified period during which the firm is expected to
stand on its own He also has important roles to play in the diversification and
enhancing of the company’s profitability and stability of income. This is done
through regular, advisory service on the best way to utilize ideal funds. He
should be able to advise on the more profitable lines in the production
process, the services which generate more value added, which services, products
or departments should, which services, products or departments should be
initiated and which should be discontinued. The accountant gathers and analyzes
quantitative information and gives opinion as to which alternative makes
economic sense The public accountant can also act, as an insolvency practitioner
by examining the company to the wthether immediate liquidation is needed or
whether the company still stands a chance to succeed. He can act as a receiver
by taking possession of the assets as charged to debenture holders and
realizing them and which he withdraws from the company. He can also act as
liquidation by selling and collecting (in case of debts) the assets of the
company and pays the proceeds to the entitled.
THE NATURE OF ACQUISITION, MERGER AND LIQUIDATION
Acquisition refers to all form of merger, amalgamation and
take-over bids. It is the process of becoming a holding company or subsidiary
involving significant cash out flow from the acquiring company to the acquired
company’s shareholders as consideration for acquired interest.
Mergers, also called pooling of interests, describe an
acquisition through the exchange of equity shares. Specifically, the parent
company issues its own share certificate in exchange of equity shares
certificate of the subsidiary. There is no purchase/ sale transaction between
the affiliates, so the long term investment by the parent company is carried at
the book value of the shares issued as consideration. Amalgamation is the
merger of two or more companies or undertakings of the interest in business or undertakings.
The merger could be temporary and involve only certain aspects of a business
operation (eg the pooling of orders or sales or formalized co-operation in
production or procurement of inputs) this is referred to as partial merger. It
can also be a complete amalgamation and usually involves the absorption of one
or two companies by an existing company by new company specially formed for
that purpose. In its narrowest sense, it is the formation of entirely new
company to acquire existing separate concern. This necessitates the winding up
of the existing companies. In its wider sense, it could be used to mean
absorption whereby there is new company formation and is a two company
situation, there will be only one liquidation. Liquidation can be described as
a situation whereby authorization is given to sell business of the old company
to a new company and in consideration to accept, shares in the new company for
the agreed asset value. The only asset in the hands of the liquidator is now
these new shares and he distributes them to the old shareholders. The end
result is the shareholders now hold share in the new company at the agreed
reduced valuation and the new company owns the business. The principal
advantage from the point of view of the shareholders is that dissenting
shareholders have the right to acquire the liquidator either to abstain from
carrying the resolution of effect or to purchase their shares at an agreed
price.
REASONS FOR ACQUISITION, MERGER AND LIQUIDATION
Expansion is a major objective of most organizations.
Usually a large and profitable company with adequate records invests on other
companies. The investment can be short term or long term; it can be an
investment in debt securities or in the share capital of the other company. When
a company invests in the shares (ordinary or preference) of another company,
the reason may be just to employ idle case and earn some additional revenue or
it could be to enhance growth through the production and sale of new products
and services. Additional reasons may be to gain access to new markets and
supply sources or to exercise influence and control over the company whose
shares are acquired. When the desire is to effect control a company invests in
the ordinary shares of the other company. Companies who could not stand the
presume of the government economic policy collapsed due to structural
Adjustment programme (SAP) introduced in 1986 which was directed towards
encouraging Nigerian companies to source their raw materials locally and the
self-sustaining. To provide themselves with a strong common front against the
industrial constraints, many other average companies came together to form a
merger. And yet the big one emerged to acquire the weak companies. For
instance, seven-up Bottling company acquired’ schwapps’, lever Brothers Limited
also merged with liptons Nigeria limited. In Nigeria today, the number or
record of company, failures mergers and acquisition is intriguing and the
trends from all indications are expected to continue as more and more companies
continue to absorb the stringent impact of ASP. And only those companies with
the correct and adequate mix of resources can survive.
STATEMENT OF PROBLEMS
Peter Langard stated that the most proprietors of small
businesses look upon the statutory audit as an imposition and do not feel that
there is any value to the business firm from it.
Thinking makes it imperative on the accountants to emphasis
the non-audit roles in order to retain the prestige, improve their income,
ensure the satisfaction of their clients and enhance national economic
development. Thus, most people including potential investors and entrepreneurs
do not understand the expert services the professional accounting firm can
provide them.
The above problem that is the lack of understanding of the
accountants other capabilities has called for some questions, answers to which
will give an insight into the non-auditing roles of accounting firms,
especially at the formation and infancy staged of business. The quests are:
(i) What is
the usual problems proprietors encounter prior to, at the formation and at the
initial stage of their business?
(ii) Which of
the accountant’s usual function are specifically relevant to the needs of new
firms?
(iii) Can public accountants assist in the
planning, registration and management of young firm? To what extent can the
accountant’s involvement help the firms to achieve growth and profitability?
(iv) Is it
feasible and advisable for public accounting firms to initiate enlightenment
programme through organization of lectures, symposia, seminars and so on with
an aim of encouraging potential entrepreneurs to set, up business?
OBJECTIVE OF THE STUDY
The objectives of the study are;
To ascertain the role of chartered accountant in the
information, acquisition and liquidation of companies
To ascertain the notice of the public particularly potential
investors and entrepreneurs, the services the professional accountants can
provide them.
To examine the problems firms will undergo at infancy and
highlighting those areas where the public accountants will readily provide
succor
1.4 RESEARCH HYPOTHESES
Ho: There is no the role of chartered accountant in the
information, acquisition and liquidation of companies.
Hi: There is the role of chartered accountant in the
information, acquisition and liquidation of companies
Ho: there are no problems firms will undergo at infancy and
highlighting those areas where the public accountants will readily provide
succor
Hi: there are problems firms will undergo at infancy and
highlighting those areas where the public accountants will readily provide
succor
1.5 SIGNIFICANCE OF THE PROBLEM
The main beneficiaries of this study are public, the
accounting firms, professional accounting bodies and government.
PUBLIC:This study will enable the public appreciate the
duties of the accountants and their capabilities. In particular it will be
useful to budding entrepreneurs who may find in the accounting firms, a useful
instrument for realizing their dreams of owing their business and making profit
through
ACCOUNTANT FIRMS: Though this work, the accounting firms may
understand more clearly the problems firms and individuals encounter which they
are in position to solve.
Subsequently, it will enable them to broaden their services,
acquire new clients and provide other related services to their audit clients.
This undoubtedly will help improve their image and ultimately their income.
PROFESSIONAL ACCOUNTING BODIES:The outcome of the study may
aid the understanding of the new challenges facing accountancy professional in
their peculiar environment.
Consequently, this will guide professional accountancy
body’s life institute of chartered Accountants of Nigeria, (ICAN) in
determining and designing the type of training and exposure that, will be given
to its existing and intending members in order to equip them adequately to
tackle such problems. Thus, it may find the need to introduce courses and
organize lectures with a view to making qualified accountants acquire new skills
relevant to the needs of clients and the economy.
GOVERNMENT: The active participation of accountancy firms in
the formation and development of new firms will help in the realization of
government’s objectives of encouraging small and medium scale industries. This
study may show necessity of government to review certain laws that hinder the
accountants from performing their roles in ensuring survival and growth of such
firms and make new laws where necessary. Besides, government will benefit from
the survival of such companies as it will derive income through taxes and job
opportunities will be created.
1.6 SCOPE AND LIMITATION OF THE STUDY
The scope of the study covers the role of chartered
accountant in the formation, acquisition and the liquidation in companies.
These constraints include but are not limited to the following;
a) AVAILABILITY OF RESEARCH MATERIAL: The research material
available to the researcher is insufficient, thereby limiting the study
b) TIME: The time frame allocated to the study does not
enhance wider coverage as the researcher has to combine other academic
activities and examinations with the study.
1.7 DEFINITION OF TERMS
a) FORMATION:
Implies bringing into being or “bringing into existence.
(b) COMPANIES:
Denotes to partnership firms, sole proprietorship, public or private companies,
or all forms of business operated.
(c) PUBLIC
ACCOUNTANT: Those accountants whose services are rendered to the general public
on fee basis.
(d) ACQUISITION:
Here refers to all forms of merger, amalgamation, and take-over bids. It is the
subsidiary involving significant outflow of cash from the acquiring company.
(e) LIQUIDATION:
Act of bringing an existing company that could not continue in business to a
close.
(f) ACCOUNTANCY
FIRMS: This means business organization consisting primarily of professional
accountants registered with ICAN and is qualified to be external auditors to
other firms.
(g) CHARTERED
ACCOUNTANTS: Refers to follows and Associate members of institute of chartered
Accountants of Nigeria and other bodies of accountant recognized in Nigeria
which qualifies one to be external auditor of a company.
1.8 ORGANIZATION OF THE STUDY
This research work is organized in five chapters, for easy
understanding, as follows;
Chapter one is concern with the introduction, which consist
of the (overview, of the study), historical background, statement of problem,
objectives of the study, research hypotheses, significance of the study, scope
and limitation of the study, definition of terms and historical background of
the study. Chapter two highlights the theoretical framework on which the study
is based, thus the review of related literature. Chapter three deals on the
research design and methodology adopted in the study. Chapter four concentrate
on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and
recommendations made of the study