TABLE OF CONTENT
Title page = = = = = = = = i
Approval page = = = = = = = = ii
Dedication = = = = = = = = = iii
Acknowledgement = = = = = = = iv
Table of Content = = = = = = = = v
Abstract = = = = = = = = vi
CHAPTER 1:
Background of the study = = = = = = = = 1
Statement of problem = = = = = = = = 4
Purpose of the study = = = = = = = = 4
Significance of the study = = = = = = = = 5
Scope of the study = = = = = = = = 6
Research hypothesis = = = = = = = = 7
Definition of terms = = = = = = = = 8
CHAPTER 2: REVIEW OF RELATED LITERATURE
Reasons for the new capital base for banks = = = = = 13
Reasons for mergers = = = = = = = = 15
Form of Merger = = = = = = = 19
How to avoid failure in mergers and acquisition = = = 20
Mergers arrangement = = = = = = = 23
What the future holds for mergers and acquisition = = = 25
The positive change which the current reform (Recapitalization
has on the economy = = = = = = = 27
The key element of the Recapitalization (Reform) by the CBN = 28
The evaluation of Accounting profession as a whole from
different perspective = = = = = = = 30
Functions of Professional Accountants = = = = = 32
Summary of the review/missing link = = = = = 34
References = = = = = = = = 37
CHAPTER 3: RESEARCH METHODOLOGY.
Area of study = = = = = = = = 38
Research design = = = = = = = = 38
Data sources and collection = = = = = = = 39
Population of study = = = = = = = = 40
Sampling procedure and sample size = = = = = = 41
Problems and limitations of data = = = = = = 44
Validation of instrument = = = = = = = 45
CHAPTER 4: DATA ANALYSIS AND TECHNIQUES.
Research Hypothesis = = = = = = = = 46
CHAPTER 5: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION.
Discussion of findings = = = = = = = = 63
Conclusion = = = = = = = 64
Recommendation = = = = = = = 65
Bibliography = = = = = = = 67
Appendix
Questionnaire
ABSTRACT
The research was poised in finding out whether accounting profession is a panacea in the recapitalization and thus ascertained equally how the knowledge of professional accountants bring positive impact in the recapitalization of Nigerian banks. One of the objectives of the study is examine the reasons for neglecting Accounting models and techniques in addressing bank financial issue/recapitalization. The population variable of 132 employees of selected banks and a sample size of 99 were highly utilized. Four hypotheses were formulated and tested with Z test method of data analysis, using four liket type. Among other things one of the major finding were that Accounting profession is imperative n the recapitalization of Nigerian banks. The researcher concluded that recapitalization cannot work-out without Accounting profession. Finally, Nigerian banks should involve the service of professional Accountant in top decision making and recapitalization.
CHAPTER 1
Background of the study
Accounting is the classification, recording and analyzing of business transaction either to prepare periodic statement of performance or provide information for management and decision making. Penguin management hand book (1987) defines profession as an occupation possessing high social status and characterize by considerable skills and knowledge much of which is the theoretical and intellectual in nature. The possession of such skill is usually tested by formal examination approved by authoritative body. Therefore, accounting profession can be seen as a systematic undertaken using proficiency to arrive at information base in solving foreseeable accounting problems.
Recapitalization is an undertaken which involves restructuring a company’s debt and equity mixture, most often with the aim of making a company’s capital structure more stable, reliable and stronger. Essentially, the process involve the exchange of one form of financing for another, such as removing preference shares from the company’s capital structure and replacing them with bond. Recapitalization is the basis for mergers and acquisition. In the year 2005, banks were obliged to keep a minimum requirement of 25billion naira by the CBN Governor, Charles Soludo with full compliance before ending of December 2005. This is move by the CBN which expresses hope for the Nigeria banking industry but however, banks who cannot meet up with the minimum requirement were prone with the option of mergers and acquisition.
The increase in capital requirement for licensed bank to a new minimum base of 25billion is intended to radically redefine the financial services industry scope on Nigeria. The stated objectives of consolidation of the banking sector include ensuring that a fewer but stronger banks emerge by effective date December 2005. To meet the challenges of the new capitalization, many banks will explore mergers and acquisition.
Accounting profession as a solution in the recapitalization of banks entails the overall calculations that comes to play in forming a syndicate. Because recapitalization can only be achieved when the professional accountants are able to ascertain whether or not each of the banks financial record and directors report are correct for mergers and acquisition to be possible.
The central bank of Nigeria (CBN) announced a new capital requirement of 25billion naira for Nigeria banks (about 181m USD), this reflect an increase from its previous 2billion naira (about 4.5m USD). This unexpected increase has inevitably led to mergers and acquisition plan by affected banks. The professional accountant here, is faced with challenges of buying the liabilities and conversions of assets of both banks to form a consolidated and stronger banks depending on the merger and acquisition plan.
The move by the CBN is geared towards restoring the confidence of the public reposed in the financial system (banking industries) this is because a number of small banks often prone with unaccountability and corruption, and it is likely that many banks would merge and Nigeria will end up with better capitalization of banks. Accounting profession is the engine room that holds the functional application of the above because mergers and acquisition plans has created the vacuum which an accountant must cover. That is, using the knowledge of accounting profession to solve identified problems that may arise due to the effect of mergers and acquisition plan in order to avoid or solve the vicissitudes that may arise at the long run, and to be able to detect fraud in the financial statement of both banks that are going into mergers and acquisition.
Statement of the problem
- Non compliance with accounting professional ethics in the move of recapitalization in banking industries.
- Importent planning and strategies in regulating the activities of financial institution / recapitalization in banking sector.
- Non involvement of professional accountant in top decision making and ascertaining the survival identified recapitalization programme
- Non professional accountant piloting the affairs of banking in recapitalization.
- Neglecting accounting models and techniques in addressing banks financial issues / recapitalization
Purpose of the study
- To determine the reasons of non compliance with accounting professional ethics in the move of recapitalization in banking industries.
- To examine the reasons for impotent planning and strategies in regulating the activities of financial institution / recapitalization in banking sector.
- To ascertain the reasons of non involvement of professional accountant in top decision making and ascertaining the survival of identified recapitalization programme in banking industries.
- To determine the reasons why non professional accountants are piloting the affairs of banks in recapitalization.
- To examine the reasons for neglecting accounting models and techniques in addressing banks financial issues/recapitalization.
Significance of the study
The primary goal of this research work is to highlight the benefit of accounting profession as a panacea in the recapitalization of the #25billion minimum capital base on the banking sector in Nigeria. And also, it is meant to be of great benefit to other sectors of the economy and other interested scholars.
The following are the beneficiaries who will gain from this work.
- The government sector uses it for long or short term planning.
- Investors who may be afraid of depositing their money with banks due to the (banks) inadequacies.
- It should be useful to any intending researcher and people who will have interest in this subject since this is a new trend in the banking sector of the economy.
Scope of the study
This research work is supposed to cover all banks across the nation but the study is limited to few selected banks of Nigeria and the result obtained could be applicable to any bank in Nigeria since they are operating on the same economic environment.
Thus the study focuses attention on accounting profession a panacea in recapitalization, and the effect #25billion minimum capital base in the banking sector in Nigeria.
Research hypothesis
Hypothesis one
Ho: Accounting profession is not a panacea in the recapitalization of banks
in Nigeria.
Hi: Accounting profession is a panacea in the recapitalization of banks in
Nigeria.
Hypothesis two
Ho: Accounting techniques has no salutary impact in recapitalization of
banks in Nigeria.
Hi: Accounting techniques has salutary impact in recapitalization of banks
in Nigeria.
Hypothesis three
Ho: Recapitalization is not a function of accounting norms, conventions
and principles.
Hi: Recapitalization is a function of accounting norms, conventions and
principles.
Hypothesis four
Ho: Accounting planning and strategies have not regulated activities
involved in recapitalization of banks in Nigeria.
Hi: Accounting planning and strategies have regulated activities involved
in recapitalization of banks in Nigeria.
Definition of terms
- Bank: According to the Nigerian banking act 1967 (as amended banks
amended act 1979) a bank is described as the business of receiving money from outside sources as deposits irrespective of the payment of interest and the granting of money, loan and acceptance of credit or the purchase and sale of securities for account of those or the incurring of obligation to acquire claims directive of loans prior to their maturing or the commissioner may on the recommendation of the central bank by order published in the federal gazette designed as banking business.
- Investment: investment is ploughing one’s finance or funds into project or assets (be it tangible or financial assets) with a view to be increasing one’s wealth.
- Merger: merger has been defined as the fusing together two or more companies “whether the fusion was voluntarily or enforced” on the other hand, the companies are joined together to submerge their separate identities into a new company formed to acquire the assets and liabilities of the liquidated companies. These are the reasons why pandey defines merger as the fusion of two or more case of a big company swallowing others. In the case of forming an entirely new corporation or entity which acquire the asset of all the combined companies, This system is called a consolidation. In Nigeria, both cases are referred as a merger.
- Statutory consolidation: Here both firms merge into a brand new firm
While the affected firms cases exist as separate firms shares of the new company are exchanged for the shares of the old companies. The new firms subsequently assumes the asset and liabilities of the old companies.
- Acquisition: Acquisition has been defined as a series of transaction
Whereby a person (individual, group of individual or company acquires and control over the assets either directly by becoming the owner of those assets or indirectly by obtaining control of the management of the company.
- Capital base: This means the paid up capital and reserves unimpaired by
Losses.
- Paid up capital: This includes ordinary shares plus non redeemable
Preference shares.
- Accounting issue: The valuation of the shares should be carried out and be reputable and independent.
The valuation method should be agreed by all the parties for the purpose determining the consideration. The valuation principle must consistently applied to all parties involve in the combination. Any revaluation of fixed assets carried out in the case of a merge should not be incorporated into the financial records of the consolidated banks except as approved by the CBN. The valuation should be satisfaction of the CBN that such a revaluation represent the fair value of the asset acquired.
DISCLAIMER: All project works, files and documents posted on this website, eProjectTopics.com are the property/copyright of their respective owners. They are for research reference/guidance purposes only and some of the works may be crowd-sourced. Please don’t submit someone’s work as your own to avoid plagiarism and its consequences. Use it as a reference/citation/guidance purpose only and not copy the work word for word (verbatim). The paper should be used as a guide or framework for your own paper. The contents of this paper should be able to help you in generating new ideas and thoughts for your own study. eProjectTopics.com is a repository of research works where works are uploaded for research guidance. Our aim of providing this work is to help you eradicate the stress of going from one school library to another in search of research materials. This is a legal service because all tertiary institutions permit their students to read previous works, projects, books, articles, journals or papers while developing their own works. This is where the need for literature review comes in. “What a good artist understands is that nothing comes from nowhere. The paid subscription on eProjectTopics.com is a means by which the website is maintained to support Open Education. If you see your work posted here by any means, and you want it to be removed/credited, please contact us with the web address link to the work. We will reply to and honour every request. Please notice it may take up to 24 – 48 hours to process your request.
