BUSINESS FAILURE AND THE ACCOUNTING PROFESSION IN NIGERIA

CHAPTER ONE

1.0     INTRODUCTION

The Nigeria economy within the half of this century experienced quite a lot of business failures. There was a rapid growth in the number of indigenous 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 time. Even with the best of strategic co-operate 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.       Un-adequate accounting records

f.       Lack of feasibility study report

h.       Fraud

Given the devastating effect of business ailments, it because  necessary to undertake a research, into the problem and failure 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 failure. 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 subject to scrutiny in such details as to their truth and fairness.

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 financial business as a going 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 appraise and predict corporate failure with the aim of putting into place an integrated framework on the subject.

1.1            OBJECTIVE OF THE STUDY

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

1.       To know why business are failing?

2.       Investigate whether government policies and actions effects operational performance.

3.       Do business rely on Accounting profession (Auditing) as tools for their performance?

4.       Identify and analyze strategic corporate plans adopted by business.

5.       Assess the remedial dosage of companies to respond to corporate objective.

1.2            STATEMENT OF PROBLEM

Problem is a phenomenon occurring in most, if not all area of human endeovor. The existence of problem cal for the finding of solution aimed of obviating such problem. The seriousness and urgency of solutions to problems are largely depended on the threat posed by the problems. However, some problems appear to defy certain worked out solution to them. Such a situation demands a close examination of the issues;

1.       Why is business failure on the increase in Port Harcourt?

2.       Why do auditors qualify their report when such concerns are failing?

3.       How effective are Accounting profession they use the measurement of their business?

4.       To what extent has his failure affected the economy?

1.3            STATEMENT OF HYPOTHESIS

(HO) NULL HYPOTHESIS

I.       The rate of business failure has been reduced by professional accountants.

ii.       (Hi) ALTERNATIVE HYPOTHESIS

          The rate of business failure has not been reduced by professional accountants.

1.4            SIGNIFICANT

Obviously candidates who are undertaking a study of business failures are likely to encounter similar problems.

 Accordingly, this study examines business failure in companies, identifying problems and sating visible suggestion that will  be useful to corporate bodies any establishment with survival strategic a period of economic depression. The potential investors will also find work a useful guide.

A part from the research workers, government agencies will also benefit immensely from this study.

1.5            SCOPE OF THE STUDY

This study covered some business port Harcourt. The period of the study covered the last five years and above in the life of some business in Port Harcourt. However, this does not preclude inquiries on the initial capital outlay, the labour strength internal control measures etc.

1.6            LIMITATION OF THE STUDY

The scope and depth of this study would have been boarder but for certain constraints such as:

1.       Time constraints.

2.       Financial constraints

3.       Unwillingness of some officers to divulge information to research effort etc.

However, care and caution were  taken an generalizing the study particular registered business.

1.7            DEFINITION OF TERMS

1.       BUSINESS FAILURE:

Lack of business success or sudden end of a business performance.

2.       CORPORATE COLLAPSE:

A failing of a corporate when the component part fail to provide support

3.       REMUNERATION:

 To pay money or make a gift to some one in return for his services.

4.       ENTERPRISE:

A venture and the character needed for such a venture.

5.       AMELIORATING:

Improving a given condition of problem.

6.       ACCOUNTIGN PROFESSION:

The profession that trains accountant into the act of book-keeping and financial reporting.

7.       COLOSSAL:

Big in size and degree

8.       DIVULGE:

To make known and reveal a fact.

9.       HYPOTHESIS:

An idea or preposition not derived from experience but formed and used to explain certain facts to provide the foundation of an argument.