THE PROBLEMS AND PROSPECTS OF AUDITING SMALL SCALE BUSINESS (A CASE STUDY OF PORT HARCOURT AND ITS ENVIRONS)
This research gear towards the problems and prospect of small scale business.
In this age of technological advancement, Nigeria is not left out. Economically, she is largely characterized by small or medium industries and firm. Therefore this study tends to help educate and guide business owners, proprietors, managers and people wishing to venture into small-scale business in Nigeria.
To achieve these objectives an expository research through unstructured interview method was employed. The data collected revealed not only some familiar problems such as lack of capital, single-entry, incomplete records, but also some salient problems like issuing of Tax clearance to business owners by Inland Revenue Office without audited accounts. The collected also reveal the prospects of auditing too, which included growth, value of money, assist management with expertise advice, evaluation and control of business activities and so on.
Finally its enhance the growth and survival of small firms and businesses, the researcher suggest that government should make provision in the law given a general distinction between “small”, medium” and “large” firms. Also that the “medium” firms and businesses should be made to compulsorily employ on a full-time basis an accounts technician with at least a minimum qualification of Ordinary National Diploma (OND) in business administration management and technology (BAMT) holders.
The year 2,000 is around the corner. The human society wants to lunch into the new century politically and economically sound. Governments, international organizations, business organizations, corporate bodies and individuals are up and doing, putting in their resources hoping and longing for a more viable economy in the coming century.
It is all over the news that Nigerians should try and keep abreast with the electronic computer system that is going to be in use in the new millennium.
Globally, so many changes and improvements have been on for some decades looking forward to making this world a more advanced and better place for man. The effort of the European community to form one government and gather their resources is still for the sake of achieving economic excellence and peace.
Nigeria as mentioned earlier is not left out in this economic and political struggle. Being a third world country and categorized as developing it needs this economic revolution more than the developed ones. For the past two decades the Nigerian government has embarked several projects such as “food for all by the year 2,000”, “House for all by the year 2,010” “House loan for low income earners and so on. This is an indication that we need economic and social development. Infact we need technological development to industrialize. Following from above aspiration of development and in an effort to allure same within a reasonable time period, our country needs to encourage all forms of development oriented efforts no matter from who and regardless of the scale. Therefore small-scale enterprises deserve federal government’s encouragement and support through reliable business environment, sound economic policies, low taxation and political stability.
When the above federal assistance are provided to the small-scale industries, they will be more profitable and in that respect will expand to large- scale organization. As the grow their activities will be translated to the larger society and this will have overwhelming influence and impact on our national development through, employment creation, provision of infrastructural facilities, more tax income, higher national income, higher industrialization etc.
There should be positive ambition of a small-scale enterprise, given all the necessary government support and management. However, you discover that most small-scale enterprises hardly survive few years after they are set up. Many factors have been discovered to be responsible. There include inability of the operators of such businesses to regard them as corporate persons, thus keep in to the philosophy of treating a business as a separate entity outside the existence their owners. Some have been crippled by lack of finances, lack of proper maintenance of records, bad management, wrong business involvement’s and unfavourable government policies and business enviorenment.
This research work is not aimed at discussing indept the root causes of these problems with the objective of finding resolutions, it will however be aimed at considering the problems of auditing small scale enterprises which could be made worse by inadequate maintenance of financial records. The researcher will consider such problems as incomplete records, single entries, lack of segregation of duties, adequate internal control, systems, lack of adequate accounting systems etc. their causes their impacts and ways of resolving them. It will be concluded by highlighting the likely prospects of such small business if they should maintain audible environment in their operations.
STATEMENT OF THE PROBLEM
Many research works have been carried out on small-scale business in Nigeria.
It is evident in our society that small-scale businesses operate for some period of years and die off. Those that survive for a long time remain stagnant without expansion.
Indeed the causes of these problems have been highlighted by researchers, these include lack of funds or capital, bad management improper maintenance of financial records and lack of transparent accountability. These factors have led to the closure of many small businesses even though many are pringing up day after day despite these drawbacks.
Also moving along the streets of major urban areas Nigeria one will always see countless signboards with business names ending with the word “Limited” as required by the law guiding registered business. However, it is amazing to know that many have no proper financial managerial accounting systems, let alone a standard audited financial report at the end of each accounting period.
With the ignorance on accountability displayed by many small scale business proprietors and owners, this research seeks to expose the problems inherent in auditing them and the benefits that goes with it.
PURPOSE OF THE STUDY
The purposes of the study are:-
- To highlight the reasons why small-scale owners shy away from audits.
- To identify their views conceptions of audit and auditing.
- To wipe out ignorance on area of accountability.
- To advice on the need and importance of auditing.
- To educate the business owners on the benefits of keeping a financial record and audit report.
Is there any reason why small scale owners shy away from audits.
– How do you identify the views and conceptions of audit and the auditing.
– Do you wipe out ignorance on the area of accountability.
– How do you advice on the use and Importance of auditing.
– Why do you educate the business owners on the benefit of keeping a financial record and audit report.
1.5 SIGNIFICANCE OF THE STUDY
Significance of the research, it is hoped to be of immersed help to the teaming population of small-scale business owners in Nigeria, both present and future. It will also serve as a guide to persons who are wishing to venture into small-scale businesses. As for the exiting ones it will revolutionize and transform them into big industries.
For the purpose of clarity in understanding and proper digestion for this work, some of the terms or words used in the context of this study are explained below:
1.6 SCOPE AND LIMITATION OF THE STUDY
The researcher has deliberately decided to study some few selected small-scale businesses in Port Harcourt city and its environs. Some of the firms are into manufacturing of various products such as wood works, (furniture), others are engaged in manufacturing of finished goods, the study also covered those who are engaged in buying and selling of variety of manufactured products.
Sincerely, this study would have been carried out in the whole of Rivers State and indeed the entire nation but for the following factors:-
- In most cases the researcher was seen and treated as a tax collector or tax assessment officer.
- Lack of co-operation from the respondents especially the business owners. C. Constrains in terms of time and capital for the project.
- Again of school identification card and project writing introduction letter also contributed more to the limitations.
However, despite these limitations, the deep desire of the researcher was still met.
OPERATIONAL DEFINITION OF TERMS
For the purpose of clarity in understanding and proper digestion of this work, some of the terms or works as used in context of this study are explained below:
Transparent Management:- This refers to clear and detailed co-ordination of resources both human, materials and money available to the managers, with dignity and respect.
Management:- For the purpose of this research management refers to managers directors and owners who are directly involved in the translation of the whole activities and process of administering small scale business in order to achieve set objectives.
Going-Concern:- This is simply the assumption that the business unit will operate perpetually, without the least expectation to terminate or die off at a pre-determined time period.
Accountability:- The duty to give a satisfactory report of that which is under ones care, often in money terms or other units of property. They could be entrusted to or owned.
Entity:- Every business irrespective of its nature and size exists and operates separately on its own, and it is different from its owner(s), director(s), management, staffs, customers and so on.
Independence of Auditor:- This explains the freedom of the person acting as auditor to a business. Apart from the statutory freedom, the freedom that sterms from an attitude of mind characterized by integrity is mostly the researchers concern in this study.
Statutory Freedom:- Independence of the auditor as required by statute or law