ABSTRACT
This research is a very crucial study on the impact of auditing in small and medium scale enterprise in Nigeria (SMES) (A case study of Albertina Nigeria Ltd). The study was motivated as a result of the work of auditors in a business, the functions measures of internal auditors in a firm, also monitors the activities of the business to avoid fraud or leakage of cash. To help enhance the research problems both primary and secondary data were collected. The research instrument used in collecting the data were questionnaire comprised of staff. In organizing and presenting the data collected table frequencies and percentage were used. The various hypothesis tested using the chi-square, data analysis and presentation gave the following finding. Proper management of inflow and outflow cash is a negative means of business growth etc,. Based on the findings, the researcher recommends that enhancement of responsibility centrer would be necessary. These should be an effective internal control system and efficiency of internal audit should be enhanced. Qualified staff and experts should be employed on consultancy basis. Most importantly, staff of the organization should be exposed to seminars and workshops.
TABLE OF CONTENTS
Title Page i
Approval Page ii
Dedication iii
Acknowledgement iv
Abstract ix
Table of Contents x
CHAPTER ONE: INTRODUCTION
- Background of the study 1
- Statement of the Problem 6
- Objective of the study 7
- Research Questions 8
- Formulation of Hypotheses 9
- Significance of the Study 10
- Scope/ Delimitation of the Study 11
- Limitation of the study 11
- Definition of Terms 12
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.0 Review Of Related Literature
2.1 Auditing Meaning and Advantages 19
2.2 The Functions of Auditing ` 22
2.3 Need for Auditing Among Small and Medium Scale Enterprises 24
2.5 Impact of Internal Audit Vis-À-Vis External Audit on Small and Medium Scale Enterprises (SMES) 28
2.6 Internal Control and its Effectiveness 30
2.7 Challenges Facing Auditing of Small and Medium Scale Enterprises 32
References
CHAPTER THREE: METHODOLOGY
3.1 Research Design 34
- Description of Respondent 36
- Sources of Data 36
- Population and Sample and sampling Procedure 37
- Method of Investigation 38
CHAPTER FOUR: DATAPRESENTATION AND RESULT
4.1 Data Presentation and findings 39
4.2 Test of Hypothesis 53
4.3 Summary of Findings 115
CHAPTER FIVE: CONCLUSIONS AND RECOMMENDATIONS
- Summary of findings 59
5.2 Conclusion 60
5.3 Recommendation 62
Bibliography
Appendix
CHAPTER ONE
1.0 INTRODUCTION
1.1 Background of the Study
The absolute importance of small and medium scale enterprise in advanced and developing countries has led and would continued to lead to a reconsideration of the role of small and medium scale enterprise in the economy of our country Nigeria.; The development of any country is regularly measured by the levels of industrialization, materialization, urbanization, gainful and meaningful employment for all those who are able and willing to work, income per capital equitable distribution of income, and welfare and quality of life employed by the citizenry. It is a fact beyond reasonable doubt that small scaled enterprises in Nigeria can be traced back to 1946 and presented and was made known to all be all time necessity.
Therefore, small and medium scale enterprise has being there from the beginning and has gained prominence today and will possibly increase its importance tomorrow based on this developmental needs of the Nigerian society in line with the recognition of all depth and breadth of consequence of small scale enterprises in alleviating poverty and increasing national development, since the adoption of the economic reform in 1986, there has been a reform for the development of Nigerian small scale enterprises as it is regarded as the key to Nigerians growth and alleviation of poverty and unemployment in Nigeria.
Thus one say that the development and promotion of such enterprise in developing countries economy like Nigeria is of paramount relevance on the fact that it brings about a great distribution dependence, entrepreneurial development ,employment and many other economic uplifting measures (Aremu, 2004). Moreover, in a country like ours (Nigeria), with an adverse balance of payment situation, the growing contribution of small scale industries sector in Nigerian export portfolio goes a long way in generating foreign exchange and smoothing out this adverse balance of payment situation Aremu (2004) posited that small scale enterprises play an important role in the economy of any country in accordance with relative levels of development. He went further to say that the entrepreneurs are more expose to risks in their business than those in corporate executives in their companies.
The findings indicates that high level of technical inefficiency which reduce their potential output levels significantly characterized the Nigerian SMES. There is strong need to assist SMES to improve their technical efficiency through adequate supply of inputs, market and credit facilities, and undertaking extensive infrastructural development and training could be important measures. The comparative factors have to do with the way SMES are situated viz-a-viz large enterprises in the corporate sector.
They are small and medium suit in comparison with the large Corporate entities which they shall give economic space. SMES therefore come in varying sizes and SMES in one country may well be large than big companies. (Albertina Nigeria Limited). In order words, the interesting feature is that, notwithstanding their absolute sizes, problem confronting SMES appears to be similar in most countries whether developing or developed. However, the level of obstacles vary from country to country ,industry to industry and depend on firms characteristics.
The following are the obstacles associated with Nigeria SMES:
Commercial banks find it very difficult to access risk premium property, this lead to differences in the parceled versus real risk profiles of SMEs in Nigeria.
Decision making skill, and sound management and accounting practices are very low among the Nigerian SMES operators,
Inadequate access to credit particularly on moderate times. This has negatively affected the growth of SMES and their development in Nigeria. It is this features which set them apart as a distinct group.
In 1990. Budget, the federal government of Nigeria defined small scale enterprise for the purpose of commercial loan as those enterprises with annual turnover not exceeding N500,000 and for merchant loan as those for the purpose of commercial loan as those enterprises with capital investment not exceeding 2,000,000 (excluding cost of land or a maximum of N5,000,000).
According to Umar (1997) the concept of small size form a relative one and it depend mainly on both the geographical location and the nature of economic actively being performance. According to Learand et al [1992] and Schubet [1994] they perceive poverty as either absolute or relative or both absolute poverty being that which could be applied to all time in all societies, while relative poverty to the loving standard of the poor to the standards that prevails elsewhere in the society in both absolute and relative terms as able to carter adequately for her/his basic needs of foods, and shelter, skills, gainful employment ,skill assets and limited chance of advancing his or her welfare to the limit of his or her capabilities.
A financial statement of a company provide managers, investors, creditors, and general users with the company’s financial status. It should ensure that data shown in financial statement portrays actual and provides all necessary information. Therefore, corporate financial statements are subject to audit by external and independent auditors.
Business in Nigeria has been classified as small, medium, large. However, a small and medium scale industry (SMI) has been defined base on the criteria of project costs, capital, cost turnover by the employee etc.
The federal and states ministry adopted the criteria of value of installed fixed capital to determine what a small and medium scale industry is. In the regard, the value has varied from N60,000 in 1972, N159,000 in 1975, 125,000 in 1986 to a fixed investment of not more than N2,000,000 (two million naira) in 1992.
Due to population growth, advancement in technology and communication the value of capital keep increasing and thereby posing great challenge to small and medium scale enterprise (SMES).
In concrete term SMES constitute a greater percentage of all registered companies in Nigeria like Albertina Nigeria Limited, and they have been in existence for a very long time, majority of the small and medium scale enterprises development from collage industries and from small to medium and large scale enterprise.
The auditing process is computed with this drafting of the auditors opinion through an audit report prepared and signed by the auditor. According to Aguolu (2002) auditing is defined as an independent examination of the financial statement, opinion with a view to expressing an opinion as to view and comply with the relevant statutes financial statement and usually summarized report of the transactions and affairs of an organization.
The process of auditing involves the distinct procedures: The auditor must ensure that the financial statement have been prepared from are in agreement with records. The auditors most ascertain the validity of the original transactions.
The auditor must confirm the completeness and accuracy of the recording of these transaction.
The investigation process of auditing commences with the initial recording of transactions. Financial transaction are every day activities of an organization as captured in document are summarized in the records of the organization and the financial statement of the organization are prepared. The reason for auditing on the financial statement of a company is to ascertain the accuracy and reliability of the records as well as the validity of the transformation recorded therein so as to guarantee the growth and development of the business enterprises and ensure that the resources are managed effectively and efficiently for maximum profit.
According to ICAN student journals (2007) the importance of good stock holding transport and distribution to achieved records keeping and accounting and expansion of sales volume through integrated market network.
1.2 Statement of Problems
Most of the established SMES failed to employ qualified accountant that would help apply accounting skill and techniques in preparing their financial statement so as to maximize profits and guarantee the growth and survival of the enterprise.
- Poor accounting records and financial statement
- Problems of not increasing the value and operational efficiency of SMES.
- Not promoting the value of auditing among small and medium scale enterprises.
- Inadequate promotion of growth and survival of SMES through proper accounting and auditing. And
- Poor examination of the roles of accountant and management among SMES
1.3 Objectives of the Study
The following objectives will be investigated in the course of this study:
- To ensure that proper accounting records are kept in the preparation of statement
- To increase the value and operational efficiency of SMES;
- To promote the value of auditing among small and medium scale enterprise (SMES)
- To help promote the growth and survival of SMES through proper accounting and auditing and
- To examine the role of accountants and management among SMES.
1.4 Research Questions
- Are proper accounting records keep in the preparation of financial statement?
- Can auditing increase the value and operational efficiency of SMES?
- What is the value of Auditing in SMES?
- Will proper accounting and auditing promote the growth and survival of SMES?
- What are the roles of accountants and management among small and medium, scale enterprise>?
1.5 Hypothesis
Orji (2009) opined that hypothesis is a testable tentation and probable explanation of the relationship between two or more variable that create a state of affirms or phenomena.
The formulation hypothesis are geared towards accessing the impact of auditing on small and medium scale management of a business.
Hypothesis 1
H0: Auditing in small and medium scale has no positive impact on the management of the business.
H1: Auditing in small and medium scale has a positive impact on the management of the business.
Hypothesis 2
H0: Auditing of small and medium scale enterprises does not optimize their profitability via cost maximization.
H2: Auditing of small and medium scale enterprises optimizes their profitability via cost maximization.
1.6 Significance of the Study
This study is beneficial to:
- Accountants/Auditors: The study will help accountant/ auditors to efficiently practicalize their training and bring to bear competent and expertise in managing the resource of their finding.
- Business Enterprises: The study will help micro small and medium scale enterprises to appreciate the important and value of auditing to the growth and profitability of their business enterprise.
- Managers/ Management: The study will also help the management/manager to effectively and efficiently manage the resources of the business enterprises through accounting and stewardship.
1.7 Scope and Limitations of the Study
This study covers the impact of auditing in small and medium enterprises using Albertina Nigeria Limited as the case study. Albertina Nigeria limited is situated at Zik’s Avenue, Enugu state Nigeria.
The study limitation also include:
- Finance: Money is a vital source for the success of any project such as this, the available money in hand of the researcher was inadequate to enable him meet with the cost sourcing information ,surfing the internet and printing such internet materials and photocopying of material and transportations.
- Time: The time apportioned for this work has to be combine with other academic work such as term paper, assignment and degree examination, thereby leaving the researcher with little time for the study.
Death of the Materials: The researcher encountered some difficulties in accessing the firms financial account statement and history of the firm as most of the staff and executive refuse giving him the access.
1.8 Definition of Terms
Definition of Audit by Taylor (1982) stated that an audit is investigation by audit into the evidence for which the final revenue account and balance sheet or other statement of organization has been prepared in order to ascertain that they present a true and fair view of the summarize or transaction for the period under review and of the auditor to report thereon.
The APB (Auditing Practice Board) indentified eight enduring principles of auditing. They are as follows;
- Integrity: An auditors should be a person of high integrity.
- Independence: if auditors are not independence of the entity being audited their reports will not be believed.
- Accountability: Auditors should act in the best interests of shareholders whilst have regards to the wider public interests.
- Judgment: Auditors should apply sound profession judgment specific area where judgment is required include assessment of reasonable statement and risk.
- Competence: Auditors are known for competency. if auditors is not competent then the entire audit process is of no value.
- Rigour: This simply means that auditors should apply strictness in conducting financial investigating in order to form their independent opinions.
- Communication: Auditors should openly disclose all matters necessary to a full understanding of their opinion and should also make disclosure to the proper authorities of matter. They should disclose in the public interest.
- Providing Value: Usually auditing should be conducted with a minimum of resource input and with a maximum of utility to the business community.
REFERENCES
Aremu, A.C. (2004). Role of small scale enterprises in the economy, Ibadan: University press ltd.
Umar, U.D. (1997). The concept of small scale firms, Lagos, Aingbade press.
Agbo, O.N. (2000). Small scale business management,
Oshogbo: University of Ife Publications.
Aguolo. O. (2002). Fundamentals of auditing, Enugu: Median
Associate.
Ezeh, A.J. (1999). Fundamentals of small business management, Enugu: Glorie Ventures.
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.
