BUSINESS FAILURE AND ACCOUNTS PROFESSION IN NIGERIA

CHAPTER ONE

1.1 INTRODUCTION

          The Nigeria economy within the first half of this century (20th century, 1901 – 2000) experienced quite a lot of business failures. There was a rapid growth in the number of indigenous companies in the country, but these companies collapsed with the same rapidity with which they were established.

          Business failures are actually one of the most difficult and complex concern faced by investors in the equity market or the stock exchange market in the recent times. Even with the best of strategic cooperate planning, business failure are still a common occurrence. Business failure can be defined as the inability of a particular business enterprise to continue to function as a going concern. The going concern concept presumed that an enterprise will continue in operation for the foreseeable future and that there is neither the necessity nor the intention to liquidate

          In general it was gathered that some of the causes of business failure includes:

a.     Lack of capital (inadequate capitalization)

b.     Inefficient management

c.      Poor remuneration packages

d.     Inadequate accounting records

e.      Unprofitable expansion (premature expansion)

f.       Mode of appointment of chief executives etc.

g.     Lack of feasibility study report.

h.     Fraud.

Given the divesting effect of business ailments, it become necessary to undertake a research into the problems and failures of business life as well as making suggestion on ways of ameliorating their adverse effects.

          According profession (Auditing) is one of the effective tool of evaluating and predicting business failures. Auditing is a process carried out by suitable qualified auditing) where by the accounts of business entities, including limited companies characterize, trusts and professional firms are subjected to scrutiny in such details as will enable the auditors to form an opinion as to their truth and fairness (Emile W. 1997)

          So many parties such as creditors, investors owners, the firm itself and the government etc. are interested with the present and expected future earning and the stability of these earning, and financially business as a good concern. Therefore they need accounting profession to evaluate and compare the profitability as well as to predict the survival of the business.

          Therefore, this study seeks to use statistical tools to appraise and predict corporate failure with the aim of putting into place an integrated framework on the subject.

1.2     OBJECTIVE OF THE STUDY

          It has been argued in recent times that the monetary value of corporate failures is of colossal notation which could faster economic growth. Therefore the following are the main aim of this study

i.       To know why business are failing.

ii. Investigate whether government policies and actions affect operational performance

iii. Do business rely on accounting profession (Auditing) as tool for their performance

iv. Identify and analyze strategic corporate plans adopted byh business.

v. Assess the preparedness of companies to respond to remedial dosage of companies corporate objectives

1.3     STATEMENT OF PROBLEMS

          Problem is a phenomenon occurring in most, if not all area of human endeavor. The existence of problem call for the finding of solution aimed at obviating such problems. The seriousness and urgency of solution to problems are largely dependent on the threat posed to problems. However, some problems appears to defy certain worked out solution to them. Such a situation demands a close examination of the issues involved.

1.     Why are business failures on the increase in Enugu

2.     Why do auditors qualify their reports when such are failing

3.     How effective are Accounting profession (auditing0 they use in the measurement of their business

4.     To what extent has this failures affected the economy

5.     To what extend do companies rely on accounting profession (Auditing) as a tool for their performances.

6.     What is the remedial dosage needed by these failure concer.