THE IMPORTANCE OF COST VOLUME PROFIT ANALYSIS IN MANUFACTURING INDUSTRY (A CASE STUDY OF NIGERIA BOTTLING COMPANY)

CHAPTER ONE

1.1 INTRODUCTIONS 

Cost volume profit analysis is a systematic method of examining the relationship between changes in volume (i.e.) output and changes in total saves, revenue expense and net profit. As a model of these relationships cost volume profit analysis simplifies the real word condition that a firm will face like model which are abstraction from reality. Cost volume profit analysis is subjected to a number of underlying assumption and limitation.

Profit is the important measure of a firm performance in the free market economy: profit is a guide for allocating resource affectively on analysis of the effect of various factors on profit is an essential step in financial planning and decision. Making. The analytical techniques used to study the behaviours of profit in respond to the changes in volume, and prices are called cost volume profit analysis (CVP). However. It should be noted that formal profit planning and control also involves the use of budgets and other forecast. As a starting point in profit planning, cost volume profit analysis helps to determining the minimum sale volume to avoid losses and the sales volume at which the profit goal of the firm will be achieve.

Therefore, the survive in today business world as started by outer and brown (1984)”concealed in efficiency have to be tracked down, standard set.

Forecast made and rigorous control must be started to ensure even modest margin of profit. The efficiency and effective management the variances of cost.

Price, output (volume) and ultimately profit will play major determination roles in the growth and survival of an organization. The break-even point is that point of activity (saves volume) where total revenues and total expenses are equal. It is neither profit nor less point. The break-even point can only be archive where there is decision involves price, volume and cost that can be split in to two classifications. Cost volume analysis is the analysis techniques used to study the behavior of profit in response to the analysis techniques used to study the behavior of profit in response to the change in volume, cost and price, it is a device used to determine the usefulness of the profit planning of the firm in the short term.

Cost volume profit analysis sometimes termed break-even analysis is an application of marginal costing and seeks to study the relationship between cost volume and profit at different activity levels and can be useful guides for short term planning and decision making. It is more relevant where the proposed changes in activity are relatively small so that established cost patterns and relationships are likely to hold good, will greater changes in activity and over the long term existing cost structure of the amount of fixed cost and marginal. Cost per unit are likely to change so cost volume profit analysis is unlikely to produce useful guidance

1.2    STATEMENT OF RESEARCH PROBLEM

  The focus of the research is to identify the importance of cost volume profit analysis in manufacturing company with emphasis on Nigerian bottling company Ilorin plant. Hence in the course of the study effort has been made to find solutions to the following research problem.

  1. For budget planning – it is used to determine the volume of sales required to make profit
  2. A target profit levels and to determine the margin of safety
  3. Determining product pricing and sales volume decisions
  4. For determining optimum production and sales mix
  5. To determining the importance of capacity utilization on cost.

1.3 OBJECTIVE OF THE STUDY        

The study has examined the importance of cost volume profit analysis in manufacturing industry in Nigeria. Due to the role of cost volume profit analysis which play in the effectiveness and efficiency management of a business enterprise. The aims and objective of the study are:

  1. To examine the introduction of cost volume profit analysis in Nigeria
  2. To highlight the reason for the introduction of cost volume profit analysis in Nigeria.
  3. To critically examine the likely problems for cost volume profit analysis in Nigeria.

Limitation did not hinder effective completion and quality of the research work.

1.4    STATEMENT OF HYPOTHESIS

          The general hypothesis that was tested in the course of the research is as follow:

Ho: the importance of cost volume profit analysis does not improve manufacturing industry service delivery.

THE IMPORTANCE OF COST VOLUME PROFIT ANALYSIS IN MANUFACTURING INDUSTRY (A CASE STUDY OF NIGERIA BOTTLING COMPANY)

PROBLEMS OF TAX COLLECTION IN NIGERIA A CASE STUDY OF UYO LGA

CHAPTER ONE
INTRODUCTION
1.1    Background of the Study
One of the recurrent problems of the three-tier system in Nigeria, a case study of Uyo LGA is dwindling revenue generation as characterized by annual budget deficits and insufficient funds for meaningful growth and viable projects development. Local governments are the nearest government to the people at the grassroots in Nigeria, a case study of Uyo LGA; they are strategically located to play a pivotal role in national development. Since they are responsible for the governance of about 70 percent of the population of Nigeria, a case study of Uyo LGA, they are in vantage position to articulate the needs of the majority of Nigeria, a case study of Uyo LGAns and formulate strategies for their realization (Ekpo and Ndebbio, 2001).  
Local administration in Nigeria, a case study of Uyo LGA can be traced to the colonial period. Available record shows that the first local administration ordinance was the Native Administration Ordinance No. 4 of 1916 which was designed to evolve from Nigeria, a case study of Uyo LGA’s old institutions the best suited form of rule based on the people’ s habits of thought, prestige and custom (Bello-Imam 1990). These local administrations were used in the north eastern and western parts of the country while the indirect rule was introduced in the rest of the north. For example, in 1926, a centralized budget system was introduced. Following the creation of Northern, Western and Eastern regions in 1946, a decentralized public revenue structure began to emerge. The first revenue commission was set up in 1946. 
During the colonial period, four revenue commissioners were created. The principles, criteria and allocation formulas recommended by the commissions are well documented (Ekpo, 2004).  Macpherson constitution of 1948 initiated some remarkable changes; the regions introduced some reforms in their local administrations in the 1950s which aimed at enhancing performance. Though, the reforms gave local administrations to collect rates and levy pools and income taxes to finance their activities, the regions had overall control of the taxes. Local administration lacked self-determination, hence their resource were inadequate. Though, the local authorities were partially successfully in the North but unsuccessfully in the Eastern and Western regions.    
Adedeji (1990) blames the ineffectiveness of local administration on the following reasons:  (a)  Lack of mission or lack of comprehensive functional role (b)  Lack of proper structure (i.e. the role of local governments in the development process was not known). (c)   Low quality of staff; and  (d)  Low funding.  According to him, these problems led the local governments into a vicious circle of poverty because inadequate functions and powers lead to inadequate funding which result in the employment of low skilled and poorly paid staff.    
Local government administration in the country experienced fundamental changes in 1976. The 1976 local government reform created for the first time, a single-tier structure of local government in place of the different structure in the various states. Our interest in the 1976 reform hinges on the restructuring of the financial system. The reforms instituted statutory allocation of revenue from the federation account with the intention of giving local government fixed proportions of both the federation account and each state’s revenue. This allocation to local government became mandatory and was entrenched in the recommendations of the Aboyade Revenue Commissions of 1977.  The 1979 constitution empowered the national Assembly to determine what proportion of the federation account and revenue form a state to allocate the local government.  
In 1931, the National Assembly fixed these proportions at 10percent of the federation account and 10 percent of the total revenue of a state. In 1985, the state’s proportion was reduced to 10 percent of the internally-generated revenue; local governments’ allocation from the federation account was later adjusted to 20 percent. It was further increased to 25 per cent with the arguments that local governments are expected to take on larger developmental responsibilities. The revenue allocation has continued to vary in proportion over time.   At present, local government receive 20 per cent of the federation account. In addition, proceed from the value added tax (VAT) are also allocated to them. Presently, VAT’s allocation is 35 per cent based on equity of states (50 per cent), population (35 percent) and derivation (2 percent). The 1976 local government reforms states the internal revenue sources of local governments to include: (a)  Rates, which include property rates, education rates and street lighting.  (b)  Taxes such as community, flat rates and poll tax.  (c)   Fines ad fees, which include court fines and fees, motor park fees, forest fees, public advertisement fees,  market fees, regulated premises fees, registration of births and deaths and licensing fees; and  (d)  Miscellaneous sources such as rents on council estates, royalties, interest on investment and proceeds from commercial activities.  
Despite this clear demarcation, states and local government still clash over sources of internal revenue.  There has been a significant increase in the number of Local Governments over the years. There were 96 divisions in 1967. By 1976, they had increased to 300. The number was increased to 774 after five yeas (Adedokun A.A. 2004) we will like to emphasize here that the rise in the number of Local Governments as implications on the assignment of public revenue responsibilities among the tiers of government. And more importantly, have effect on local government development. Development is highly associated with fund, much revenue is needed to plan, execute and maintain infrastructures and facilities at the local government level. The needed revenue collected for such developmental projects. Like construction of accessible roads, building of public schools, health care centers, construction of bridges among others are soles generated from taxes, royalties, haulages, fines and grants from states, national and international governments. Thus, the Local government cannot embark, execute and possibly carryout the maintenance of these projects and other responsibilities without adequate tax collection. This is the basic reason why development is skeletal at some Local Government councils in Nigeria, a case study of Uyo LGA. 
The issue of poor tax collection is not exceptional to local governments in both Ikpoba Okha and Oredo Local Government of Edo State. This has been one of the problems encountered by most local council’s administration in Nigeria, a case study of Uyo LGA. This however pronouncedly affected development negatively in local government councils. In this research project, the issue to address is how far this poor tax collection can affect revenue generation and more importantly developmental implications for Ikpoba Okha and  Oredo Local Government Area of Edo State.   
1.2     STATEMENT OF THE PROBLEM 
The Local Government Council takes direct care of the grassroots people that is the people in the rural areas. These groups of people sometimes lack essential facilities and condition of modern civilization. They lack pipe bore water to drink, do not have electricity, accessible roads, poor educational infrastructure and facilities to mention but a few. This is one of the major reasons of rural – urban migration of movement. This has made our cities to be congested and increase in many criminal activities. 
Based on the above and foregoing assertions, it is obvious that local government has to adopt an effective taxation system which will enhance revenue generation. This no doubt is no doubt over the years has become a serious problem. the local government administration has not live up to the expectation in terms of grass root  development. This might be as a result of poor revenue generation or tax collection. If Nigeria, a case study of Uyo LGA is to achieve her desired goal of vision 2020 and possibly meet the millennium development goals (MDGS) target, the issue of tax collection must be addressed squarely. Hence, the researcher is bothered to find out the importance of taxation as a source of government revenue in Nigeria, a case study of Uyo LGA..   
1.3     OBJECTIVE OF THE STUDY
The broad objective of the research is to examine the problems of taxation as a source of government revenue in Nigeria, a case study of Uyo LGA.  The other objective of this study includes: 
i.       To determine the level of modern social amenities available in Etsako West and Etsako East Local Government of Edo State. 
ii.      To find out the level of poverty associated with the rural people as a result of poor development 
iii.     To find out the degree of rural-urban migration. 
iv.     To make useful suggestions to solve the problem of poor tax collection as development depends on revenue generated.    
1.4    RESEARCH QUESTIONS
i.      Does taxation has any effect on local government revenue 
ii.     Does effective taxation system enhance local government development? 
iii.    How can revenue generation in Ikpoba Okha and Oredo Local Government of Edo State be improved?     
1.5   Statement of Hypotheses 
1.     H0: taxation is a viable source of local government revenue 
        H1: taxation is a viable source of local government revenue     
2.     H0: There is no significant relationship between taxation and development in local governments in Nigeria, a case study of Uyo LGA 
        H1: There is a significant relationship between taxation and development in local governments in Nigeria, a case study of Uyo LGA   
3.     H0: Poor taxation policies have negative effect on local government revenue generation 
        H1: Poor taxation policies have positive effect on local government revenue generation.   
1.6   SIGNIFICANCE OF THE STUDY
The significance of any human endeavour is measured by its relevance to solving human problems. The findings of this study would help Local Governments in Nigeria, a case study of Uyo LGA to identify the problems associated with revenue generation and its consequences on development. However, this study will be of great significance to managers of organizations, entrepreneurs, and investors especially those whose organizations’ tax are within the purview of the local government administration; as it reveals the irregular tax policies and practices that can jeopardize the effectiveness and sustenance of their businesses. It as well enable local councils capitalizes on their gains while focusing on areas of comparative advantage. Also, major beneficiaries of this study are auditors and accountants, as well as financial analysts, government personnel and the revenue taxation board will benefit from this study.     
1.7     SCOPE AND DELIMITATION 
The study is focused on the importance of taxation on government revenue. The study focus on the impact of revenue of Ikpoba Okha and Oredo local government, and how it affects development of the local government areas. It will also involve the analysis of problems associated wit revenue generation and its impact on the development of the local government councils.   
1.8   LIMITATION OF THE STUDY
The study is confined to local government in Edo State, particularly Ikpoba Okha and Oredo local government, the study only identify  with the taxation as it affects revenue of the local government areas stated above. It will also involve the analysis of problems associated wit revenue generation and its impact on the development of the local government councils.   
1.9   DEFINITION OF TERMS
Some concepts require proper explanation to enhance our understanding of the theme where necessary opinion of scholars will be cited to explain the terms. The researcher will also give some fundamental definition of terms.  
Tax:  Tax can be defined as a compulsory levy by government on goods, services, income and wealth. It provides definite source of revenue for government expenditure. (Udeh O.S. 2008). It is the way by which government obtain extra money. It spent from income of individual and companies. Tax could be direct or indirect tax. A tax is a payment made by the taxpayers and used by the government for the benefits of all the citizens. 
Taxation: Therefore is the process of imposing levies, taxes and other duties on an individual or body, therefore, sourcing revenue for the local government in carryout their aim and objectives. 
Local Government: According to Lawal (2000) Local Government as a political sub-division of a nation in Federal system which is constituted by law and has substantial control of local affairs which includes the power to impose taxes or exact labor for prescribed purpose. According to William Robson (2006) Defined Local Government as involving the conception of territorial, non-sovereign community possessing the legal right and the necessary organization to regulate its own affairs.    
Revenue: Revenue could be defined as the funds generated by the government to finance its activities. In other words revenue is the total fund generated by government (Federal, state, local government/ to meet their expenditure for a fiscal year. This refers also to the grand total of money of income received from the source of which expenses are incurred. Revenue could be internal or external revenue.  
Expenditure: Public expenditure refers to the expenses which the government incurs for its own maintenance, in the interest of the society and the economy in order to help other countries.  
Tax evasion:  Tax evasion means illegal reduction in one’s tax liabilities, thereby paying less than the appropriate amounts and not paying at all.  
Tax avoidance: Tax avoidance is the act of streamlining one’s financial affairs within the law so as to minimize the tax liabilities.  
Development: According to Ake (2001) Development is thus the process by which people create and recreate themselves and their life circumstances to realize higher levels of civilization in accordance with their own choice and values. It also a type of social change in which new ideas are introduces into a social in order to produce higher per-capital income and levels of living through more modern production methods and improved social organization.

MANAGEMENT OF FOREIGN EXCHANGE BY CENTRAL BANK OF NIGERIA: PROBLEMS AND PROSPECTS

CHAPTER ONE
INTRODUCTION
1.1   BACKGROUND OF THE STUDY It has already been stated that money is a common denominator in which the rate relative values of goods and services can be expressed.  Throughout history any community which form itself into a nation for the purpose of self-government immediately introduces its own distinctive unit of account-monetary unit of account (legal tender). In the words of Endel (1973-77) in the international realm no legal tender exist vales must be measured, accounts kept and payments made by conversion of one currency not another, this conversion process is known as foreign exchange.         
Foreign exchange can be acquired by a country through the export of goods and services, direct investment inflows, aids and grants.  When foreign exchange receipts, the surplus is added to reserves.  These reserves which are also savings from foreign exchange transactions are held by the authorities to finance short falls in foreign receipts and to safeguard the international value of the domestic currency. 
When there is disequilibrum in the foreign exchange market which is caused by in adequate supply of foreign exchange reserves, pressure may be exerted on foreign exchange reserves.  If the reserves are not adequate, it will deteriorate into balance of payments problems, hence the  need to manage a nation’s foreign exchange resources so as to reduce the adverse effect of foreign exchange volatility. The management of foreign exchange resources is further informed by the need to set an appropriate cleaning price in the foreign exchange market. Therefore the act of foreign exchange management in a conscious attempt to harness foreign exchange resources, deploy them to service the economy so as to prevent the economy from experiencing shocks due to foreign exchange volatility.         “The practice of managing the foreign exchange resources has therefore evolved broadly in line with the globalization and liberalization of economics and financial markets”.  (Anifowose, 1997:19)  
1.2      STATEMENT OF THE PROBLEM
The primary objective of foreign exchange management is to reduce foreign exchange instability and its adverse effect on the economy. Despite government efforts to achieve this objective through the central bank of Nigeria (CBN), foreign exchange (monitoring and miscellaneous provisions) Decree No promulgated in 1995 and the introduction of the use of forms  A and 19 in 1996, a handful of problems are still identified with foreign exchange operations in Nigeria.  These problems include  
(i)    Inadequate inflow of foreign exchange 
(ii)   Continuous depreciation in the value of the Naira 
(iii)   Balance of payment problems 
(iv)   Problem of finding Sectorial allocation of foreign exchange in the foreign exchange market   
1.3      OBJECTIVES OF THE STUDY
The objectives of the study are: 
(i)   To examine the roles of the central bank of Nigeria in managing the country’s foreign exchange 
(ii)   To examine the impact of foreign exchange rate policy in the foreign exchange management. 
(iii)   To examine the effects of the activities of parallel market on the foreign exchange. 
(iv)   To examine the impact of foreign exchange decree No. 17 of 1995 and other control measures in managing foreign exchange in the country. 
(v)   Examine the problems facing exchange management in Nigeria.  
1.4   SIGNIFICANCE OF THE STUDY
(i)   This work is in partial fulfillment of the requirement for the award of Higher National Diploma (HND) in Accountancy. 
(ii)   The work will be immense help to future researchers who will make their own investigation into this subject area. 
(iii)  The work will help the Central Bank of Nigeria (CBN) regulate the activities of the banks with a view in gathering them to fund foreign exchange market adequately, increase foreign exchange inflow and Balance of payment surplus, determine a realistic exchange rate and adequate foreign exchange control system. 
1.5      RESEARCH QUESTION
(i)   How do you assess the role of the central bank of Nigeria in managing the country is foreign exchange. 
(ii)   Do you think that the impact of foreign exchange rate policy has been encouraging? 
(iii)   Is it true that the activities of the parallel market operators negatively affect the effective operation of the foreign exchange management in Nigeria?
(iv)   How would you assess the impact of foreign exchange decree No 17 of 1995 and other control measures in managing foreign exchange in the country?
(v)   What are the problem facing foreign exchange management in Nigeria.
1.6   HYPOTHESIS
The following hypothesis is have been designed for analysis: 
(i)     Ho:  The role of Central Bank of Nigeria in managing the country’s foreign exchange is not impressive.  
        Hi:   The role of central Bank of Nigeria in managing the country’s foreign exchange is impressive. 
(ii)    Ho:   The impact of exchange rate policy in the management of foreign exchange in Nigeria is not encouraging.
        Hi:    The impact of foreign rate policy in the management of foreign exchange in Nigeria is encouraging 
(iii)   Ho:   The activities of the parallel market operators negatively affect the effective operation f the foreign exchange management in Nigeria.
        Hi:    The activities of the parallel market operator do not negatively affect the effective operative of the foreign exchange management in Nigeria. 
(vi)    Ho:   The impact of foreign exchange degree No 17 of 1995 and other control measures in managing foreign exchange in the country is not impressive. 
        Hi:    The impact of foreign exchange decree No 17 of 1995 and other control measures in managing foreign exchange in the country is impressive.
1.6      SCOPE AND LIMITATION SCOPE
 The area of this project in Enugu, the research is to determine how foreign exchange could be effectively managed in Nigeria by CBN.   
LIMITATION
In the process of carrying out this study the researcher encountered some problems which include:  Finance the cost of transportation to area where data are to be collected was too high.   The negative attitude of CBN officials toward disclosure of information was a limiting factor. Finally, time for data collection and attitude lectures was a limiting factor.   
1.8   DEFINITION OF TERMS
EXCHANGE RATE:   This is the number of units of one currency, which exchange for a given number of units of anther country.   
FOREIGN EXCHANGE MARKET:   This is a market in which one national currency is brought in exchange for another national currency.   
FOREIGN EXCHANGE RESERVE:   These are foreign currencies held by the Central Bank of Nigeria (CBN).            

TAXATION AND LOCAL GOVERNMENT DEVELOPMENT IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1    Background of the Study

Ademolekun (2005) noted that one of the recurrent developmental problems facing local government development in Nigeria is dwindling revenue generation as characterized by annual budget deficits and insufficient funds for meaningful growth and viable projects development. This statement implies that local governments have ineffective taxation policies which to a large extent affect their revenue base. Thus, they so much depend on revenue from the federal statutory account. This background brings us to the study of taxation and local government development in Nigeria. Tax has been defined by various authorities and professionals in various ways. Webster’s Dictionary of the English Language defines tax as a charge imposed by government authority on property, individuals or transactions, to raise money for public purpose. Black’s Law Dictionary describes tax as a ratable portion of the produce of the property and labour of the individual citizen, taken by a nation. Tax is a compulsory levy which a government imposes on its citizens to enable it to obtain the required revenue to finance its activities (Adesola, 2008).   
Examining the various definitions of tax one observes taxation is very important for any government if it has make any meaningful economic development. Thus, this study is concerned with development at the grass root as being the goals of the local government administration. Thus, in attempt to carryout development at all nooks and crannies of the society, the local government as the tier of government that is nearest to the people is saddled with the responsibility of direct development of the people to a certain level.Development is highly associated with fund, much revenue is needed to plan, execute and maintain infrastructures and facilities at the local government level (Okoli, 2000). The needed revenue generated for such developmental projects, like construction of accessible roads, building of public schools, health care centers, construction of bridges among others are soles generated from taxes, royalties, haulages, fines and grants from states, national and international governments. Thus, the Local government cannot embark, execute and possibly carryout the maintenance of these projects and other responsibilities without adequate taxation. This is the basic reason why development is skeletal at some Local Government councils in Nigeria. The issue of poor taxation is not exceptional to local government in Edo State, and Uhunmwode Local Government in particular. This however pronouncedly affected development negatively in local government councils. In this research project, the issue to address is how far this poor taxation can affect development especially in Uhunmwode Local Government.

1.2   Statement of the Problem

The Local Government Council takes direct care of the grassroots people that is the people in the rural areas. These groups of people sometimes lack essential facilities and condition of modern civilization (Udeh, 2008). They lack pipe bore water to drink, do not have electricity, accessible roads, poor educational infrastructure and facilities to mention but a few. This is one of the major reasons of rural–urban migration of movement. This has made our cities to be congested and increase in many criminal activities.

Based on the above and foregoing assertions, it is oblivious that the impact of poor taxation on the development of the rural area is a serious problem. This might be as a result of poor taxation. If Nigeria is to achieve her desired goal of vision 2020 and possibly meet the millennium development goals (MDGS) target, the issue of taxation must be addressed squarely. Hence the researcher is bothered to find out the impact oftaxation on the lives of people at the rural area and how it has affected development in general especially in Uhunmwode Local Government Area.

1.3   Purpose/Objective of the Study

The broad objective of the research is to evaluate the impact created by taxation on the development of Uhunmwode in Abia State. The other objectives of this study include:

To determine the level of modern social amenities available in Uhunmwode. 
To find out the level of poverty associated with the rural people as a result of poor development 
To make useful suggestions to solve the problem of poor taxation as development depends on revenue generated.  

1.4   Research Questions

What are the impacts of poor taxation on the development of Uhunmwode? 
Are there adequate modern social amenities in Uhunmwode? 
Is the poverty level of the rural people high has a result of poor development? 
How can taxation in Uhunmwode be improved?  

1.5   Significance of the Study

The significance of any human endeavour is measured by its relevance to solving human problems. The findings of this study would help Uhunmwode Local Government to identify the problems associated with taxation and its consequences on development.

1.6   Scope and Delimitation

The study is focused on taxation and local government development. The study also looks at the various tax administrations and especially on how revenue generated from taxes are managed for developmental purpose of Uhunmwode Local Government. The study will cover a period of five years (i.e. between 2005 and 2010).

1.7   Limitation of the Study

The study is focused on the impact of poor taxation and how it affects development of the local government areas. It will also involve the analysis of problems associated wit taxation and its impact on the development of Uhunmwode Local Government.

1.8   Definition of Terms

Some concepts require proper explanation to enhance our understanding of the theme where necessary opinion of scholars will be cited to explain the terms. The researcher will also give some fundamental definition of terms. 

Local Government:   According to Lawal (2000) Local Government as a political sub-division of a nation in Federal system which is constituted by law and has substantial control of local affairs which includes the power to impose taxes or exact labor for prescribed purpose. According to William Robson (2006) Defined Local Government as involving the conception of territorial, non-sovereign community possessing the legal right and the necessary organization to regulate its own affairs.

Revenue:   Public revenue could be defined as the funds generated by the government to finance its activities. In other words, revenue is the total fund generated by government (Federal, state, local government/ to meet their expenditure for a fiscal year. This refers also to the grand total of money of income received from the source of which expenses are incurred. Revenue could be internal or external revenue.

Generation:   This is the process of sourcing revenue for the local government in carryout their aim and objectives (Udeh O.S. 2008). 

Expenditure:  Public expenditure refers to the expenses which the government incurs for its own maintenance, in the interest of the society and the economy in order to help other countries.

Tax:   Tax can be defined as a compulsory levy by government on goods, services, income and wealth. It provides definite source of revenue for government expenditure. (Udeh O.S. 2008). It is the way by which government obtain extra money. It spent from income of individual and companies. Tax could be direct or indirect tax. A tax is a payment made by the taxpayers and used by the government for the benefits of all the citizens.   

Tax Evasion:  Tax evasion means illegal reduction in one’s tax liabilities, thereby paying less than the appropriate amounts and not paying at all.

Tax Avoidance:  Tax avoidance is the act of streamlining one’s financial affairs within the law so as to minimize the tax liabilities.

Development:   According to Ake (2001) development is the process by which people create and recreate themselves and their life circumstances to realize higher levels of civilization in accordance with their own choice and values. It also a type of social change in which new ideas are introduces into a social in order to produce higher per-capital income and levels of living through more modern production methods and improved social organization. 

TAXATION AS A MAJOR SOURCE OF FUNDING TO THE GOVERNMENT OF NIGERIA

CHAPTER ONE 
INTRODUCTION
1.1   BACKGROUND OF THE STUDY 
Taxation is a major instrument for the conduct of public policy. This is true for both developed and developing countries. Taxation is known to accomplish a number of objectives revenue generation for government, economic stabilization and income re-distribution. Taxation as an instrument of public policy is essentially concerned with the manipulation of financial operations of both the government anti private sectors with a view of furthering certain economic objectives. In Nigeria these economic objectives includes the attainment of appreciable level of full employment, avoidance of excessive inflation, achievement of satisfactory balance of payment position. Appreciable increase in the national income and a reduction of extreme inequality among the citizens, provision of other essential necessities of life like water, school building of bridges roads and others. 
The question now arises, How does the finding of these activities come about? The government can only discharge these duties by generating enough revenue to provide enough finance for the accomplishment of these tasks ahead and the Board of Internal Revenue is by law charged with the responsibility for assessing, collection and accounting of all taxes in Nigeria. The government to the individual and payable to the economic and social responsibilities define taxation as a compulsory levy. In Simon’s income tax (1852) Lord Maccnaghten quoted “ Income tax is a on income. Its not meant to be tax on anything else”.  Dalton (1954:23) defined tax as a compulsory contribution imposed by a public authority irrespective of service rendered in return. 
Income tax law and practice by Njokamma. CA. Defined income tax as a creative of statute. In interpreting its provisions. “ No equity, no intendment” or anything else should be implied. The clean terms of the law should be applied but no necessarily restricted against the revenue. Nevertheless tax is not the only sources of government revenue other sources include. 
¨   Fines and fees 
¨   Motor licensing fees 
¨   Rent on government quotas 
¨   Interest and repayments 
¨   Dividends and Royalties on government 
¨   Share holdings 
¨   Miscellaneous State share of federal government disbursement.
¨   Loans and grants 
¨   School fees 
¨   Hospital fees Revenue from government parastatals likes the water co- operation department. 
The private sector is not left out in the fund generation do their own fund comes inform of borrowing private savings etc The absence of well-organized and locally controlled money markets for borrowing has faced private sectors in most developing countries especially Nigeria to rely primarily on fiscal measures to mobilize domestic monetary resources for fund generation. For instance if profits of taxation, the marginal efficiency of investment will decline and consequently a fall in investment is observed. On the other hand if profit of investment are increased through low tax rate the marginal efficiency of investment will in investment is observed. 
However Duke Man (1962 P .462) said that for an effective tax system that encourages investment, has to some extent be based on high rates, a fact peculiar with the paradox of investment stimulating taxation, and as well discrimination, so long as it is significantly qualitative and psychologically substantial. This suggestion may not augur well for investment activity where retained profits and savings form the buck of capital formation. Realizing the importance to finance as the train wires of economic growth the government initiates financial policies through annual budgets and tax laws to fund and provide necessary extension services for these business enterprises and also through several government financial policy, ensures adequate financing of small scale enterprise. We are now convinced that of all these source of revenue by government that tax contributes the largest proportion. With charges in these considerations above attention have been focused on the fiscal policy best suited to the economic development of the country. As part of the search for desirable fiscal policies high consideration is placed on the value of goods and services payable by the final consumers. The collections of this tax are accountable to the federal government by the federal wand Revenue, while a reasonable percentage is given to the state where VAT is collected from. Nevertheless the implementation of various government measures the their effects are most times, at variance with the objectives of government. Some of the revenue collection agencies are either ill equipped to carry out their functions effectively or equipped with personal of dubious character who trust laudable objectives of the government. 
Most tax papers don’t pay willingly, some take laws into their hands to either evade or avoid tax while others collide with some tax official as well as employ the services of tax experts to explore the tax loophole. As a result of such ill activities towards taxation there is always a short fall in the government-projected revenue. In view of the importance to taxation as a principle source to government funding as well as a powerful instrument in the conduct of public policies. This study is aimed at exploring all avenues of tax collection in Nigeria and the performance of the Nigeria Board of Internal Revenue to keep the flag flying in support of the topic to the study that taxation is a major source of government funding.   
1.2    STATEMENT OF THE PROBLEM 
Tax constitutes the greater percentage of internally generated revenue in Nigeria and as well the major source of fund for the government financing its activities,. Tax however has its fundamental problems in the area of Administration and management. There is deficit in planning, control and Adequate information flow of Tax collection generally. Since the government financial policy and objectives is to ensure adequate fund and conducive environment for the people’s satisfaction through progressive taxation and other fiscal measures designed to end the rapid growth and development of the society for the benefit of the citizenry. 
It is therefore necessary that these avenues of fund are solidified. But on the other way round the implementation of the government taxation policy and the realization of the taxation goal most a times run at variance with the policy outlined in the annual budget as well as the tax laws provisions. Many individuals as well as organization see taxation policy as being harsh and unfavourable. They argue that while few enterprises especially large company continues to benefit from the government support through grants, Subsidies and other tax incentives. Others find the policies unbearable as a result any little opportunity by such people to evade or avoid tax is highly utilized. The results of all these tax evasion and avoidance are that less revenue that envisage is collected through tax by the government and thereby less social amentias than proposed are carried out. These problem will be solved as soon as an efficient machinery is set in motion for effective administration and review of state tax laws if made or amended.   
1.3    PURPOSE/OBJECTIVES OF THE STUDY
The objectives of the study is finding way of making the tax system effective and putting up measure that will help the government realize adequate fund for its developmental activities. Other objectives are 
1.       To discuss and analyze the taxes being administered and Eungu state.&nb sp;
2.       To ascertain the total value of taxes collected during the period year by year. 
3.       To determine other sources from which the Nigeria Government can generate more tax revenue. 
4.       To ascertain other sources of the government revenue improve on them. 
5.       To make suggestions on ways of increasing the total revenue of the state government both tax and other sources of revenue to the Government. 
To really achieve these objectives efforts will be made to: 
1.       Identify all the problems militating against effective tax assessment activities. 
2.       Analyze the problems and execute the suggested solutions
3.       Suggest implementation strategies with a view to assisting the management in carrying out government policies and programmes.
4.       Bring the problem to the focal eyes of the department and government. 
5.       Sensitizes the government and create the awareness on the people with abysmal attitude towards tax payment and its consequence on the economic and social development of the state.  
1.4     RESEARCH HYPOTHESIS 
H0:    Tax is not the major source of Government funding 
H1:    Tax is the major source of government funding 
H0:    There is no significant relationship between tax revenue generated by the state. 
H1:    There is significant relationship between tax revenue and total revenue generated by the state. 
H0:    Tax Administration system in Nigeria is not efficient and there is mismanagement. 
H1:    Tax Administration system in Nigeria is efficient and there is proper management. 
H0:    Nigeria government does not adequately accomplish her taxation problems. 
H1:    Nigerian government adequately accomplishes her taxation problems. 1.5   SIGNIFICANCE OF THE STUDY 
The study will help to evaluate the tax revenue generated and assess the tax collection machinery set in motion in Nigeria. It will also help to evaluate the tax and the government is exploiting other revenue source available to the state and how these source. This study if properly utilized will enable the Board of Internal Revenue and the State Government to know the problems effecting tax assessment and collection in the state. 
The study will also reveal how far the tax policies in Nigeria are being implemented furthermore strategies on improving on the revenues generation has mapped out for the provision of infrastructure.  As a result of this, there will be high standard of living for the tax papers of the state. Finally it is meant to enlighten the citizen of the state to know the objectives of tax and thereby reducing tax evasion and avoidance.  
1.6   LIMITATION OF THE STUDY 
Some circumstance beyond human control has brought some distraction research work, some of these inevitable circumstance are: 
a.     Education System: Abnormalities surrounding the educational system in Nigeria in which Nigeria is not an exception. 
b.     Limitation of Time: The limited number of months given for this research to done is less than 3 three months and normally this is to be done more than this time. The research work is combined with other academic activities in school. All these limiting factors had not allowed a thorough research work to be carried on effectively. 
c.    Financial Problem: Another problem the researcher faced was financial constraints and this limited the work. The high expenses incurred in gathering these materials, photocopying of essential material, typing of document etc. visitation where applicable. 
d.   Lack of Cooperation: Finally, is lack of cooperation with the researcher encountered by the Board not being very active in he release of adequate information. while some staffs were not willing to give out necessary data (Figures) either by ignorance or fear of exposure of such vital information.   
1.7     DELIMITATION OF THE STUDY
This research work is supposed to have covered the tax administration and its revenue generation system and the comparison with other sources of government revenue in Nigeria. Some tax administrated by the Federal Government like Company income tax, petroleum profit tax, capital gain tax, capital transfer tax could have been involved in this research. Due to the limit time constraint, shortage of information supply and financial constraints, the study cannot be extended to these major parts and has therefore been limited to the administration of tax as applicable in Nigeria Government.   
1.8     HISTORICAL BACKGROUND OF BOARD OF INTERNAL REVENUE NIGERIA 
The present day Nigeria Board of Internal Revenue would like most government agencies trace its origin to when the colonialist established their government in Nigeria. The needs for government to generate revenue to enable her execute her programmes brought about the Division of the Ministry and the Independence in 1960 and because of the expending responsibility, the Board of Internal Revenue was established as an autonomous government agency, charged with the sole responsibility of the tax assessment and collection within various jurisdiction in Nigeria. 
1.9     DEFINITION OF TERMS
Some of the terms used during this research, which have special application to study, are defined: 
Revenue: This is the gross receipt or receivable of a governmental unit derived from taxes, custom and other main sources of government revenue but excluding appropriation and allotment from the consolidated Revenue fund (CRF). 
Tax: The Oxford Advanced Learners Dictionary of current English DEFINES tax as “(sum of money purchase etc) to the government for public purpose”. Tax can also be defined as a compulsory levy by natural or cooperate, payable to the government for the benefit of the citizenry. 
Tax Assessment: The calculation the tax due to the paid by an individual. 
Tax Collection: Staff of the Board charged with collection of taxes from the public.
Zonal Tax Authorities: These are senior tax officer charged with assessing and collecting of tax within their zone. 
Tax Law: These are laws made by the government prone to review as well giving the guidelines and draft on how and paid. 
These laws are standard guiding all the tax offices in the federation. Examples are ITMA 1961 Income Tax management Act 1991 etc. Income management Act (ITMA): These are laws committee guiding the collection and payment of tax in Nigeria. This was promulgated in 1961 but since been amended. 

FINANCIAL MANAGEMENT IN GOVERNMENT OWNED COMPANIES

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

Nigeria limited, an economic parastatals was incorporated in may 1962 under ordinary company law as a partnership between the form Nigeria government and said machine. The supplied plant to the company and managed the affair until the war broke out in 1967 is only indigenous gas producing company in Nigeria.

            After the war in 1970, the company was reactivated and started production on 1stApril 1975. between 1983 and 1984 there was cram shaft broke down which resulted in the stoppage of production. The company received #733.000 from the state government which was later converted into their share and also as loan.

1.2              STATEMENT OF THE PROBLEM AND PURPOSE OF THE STUDY

The statement of the problem is to carryout an investigation into the field of financial management practice in government owned companies, with particular reference to Nigeria limited and also highlight the financial problem facing these companies in this problem the main purpose of this study is to:To identify and examine some factors that militate against successful financial management of government owned companies To find out why those problem have been difficult to solve and make recommendation and suggestion on how they should be solved. Explore other areas which in the writers opinion are relevant for effective management of funds. To recommend generally and specifically the study of financial management.

1.3              RATIONALE OF THE STUDY

Financial management vary necessary according to the nature of the enterprise concerned, once the corporation objective have been defined, the examination of the whole business structure and the related financial need as follows:

            The goal and objective of financial management is to maximize the shareholder wealth by this view they should formulating the firms objective in terms of the share holder interesting the main base of financial market is implemented. That mean the firms with better performance will have higher stock price and additional funds can be commonly pressure the aims of financial management is the maximization of the firms value (i.e. profit maximization relative to investment).

To obtain these, some unprofitable short run may be required

Financial management objective of the company is to maximize its value to their share holders.

1.4              SIGNIFICANCE OF THE STUDY

Financial management is very important for the achievement of the firms goal and objective. Because it help the financial manager to carry out their effective project financial management in government owned companies help to see how the field of financial management will contribute to a better improvement of the study of finance, there by minimizing the result of our investment and divided decision by companies.

            It helping the finance manger for decision making by planning for futuristic event that may occur for day to day business activities.

1.5              DEFINITION OF THE TERMS

Financial management may be defined as the function and areas of responsibilities of financial manager such as.The raising of funds to finance project. The employment of funds to raised in viable project The management of the cash flow arising from these project The return of funds to the funding sources. This fund are raised from financial market and allocated among different uses the flow of fund involved in the operation of the enterprise are managed. The financial management in the provision of fund of time it is required any person responsible for finance in any form, is confronted with the prospects of inflow and outflow at receipts and payment and they arise.

LIQUIDITY MANAGEMENT PRACTICE AT FIRST BANK OF NIGERIA

CHAPTER ONE

INTRODUCTION:

BACKGROUND OF THE STUDY

A bank is considered liquid when it has asset and investment in security that are easily reliable at a short notice without a loose to the bank together with the ability to raise fund from he other source, to enable it to meet its payment obligation and financial commitment in a timely manner. In addition there should be financial commitment buffer to meet almost all financial emergency.

Liquidity management of a commercial bank is a very vital issue in the banking industry. It is the ability of the bank to manage its liquidity position so that neither the liquidity nor the profitable will suffer. For this to be effective, liquidity management must contribute to the achievement of the overall cooperate fund management objectives to attain and maintain a balance of profitability, solvency and liquidity.

Obligation of the maximum liquidity owed by surplus unite can only be archived by holding enviable fund as cash since it has maximum profitability. The must invest all fund on loan and average the highest yielding, and most liquid of the entire asset in the bank.

Banks, because of the important role they play in the economy, particularly in monetary and credit aspect of the economy faces a lot of restriction irrespective of the fact that banks are the most highly and closely regulated of all the business, they still have to operate within the confines of the law and solve the problem of liquidity and profitability dilemma in the economy. Apart form the constraints and the dual role of liquidity and profitability, there is virtually no work on the liquidity management in Nigeria commercial banks. In the light of this, the researcher has decided to discuses this topic based on the analysis of the data collected. The researcher will suggest some solution the problem of liquidity management in the country.

STATEMENT OF THE PROBLEMS

Commercial bank asset management is a never-ending thing of war. This war is pitched between efficient liquidity management on one hand and profitability on the other hand. As Liquidity and profitability are two inherent goals in commercial bank, bank managers will continue to experience the conflict o trying provide efficient mechanism of addressing their bank liquid and hence their safety of necessarily arising from the nature of their liabilities.

A high proportion of commercial bank liabilities are made up of demand deposits (current account fund deposits) saving deposit, fixed deposit and fund from other source. Demand deposit are those bank liabilities that are payable on demand. Necessary commercial bank need to keep only liquid asset to meet a considerably volume of withdrawal. Liquid asset earn little of zero return on asset. It is les risky and the less it likely to yield adequate returns. As such, the high the less risky asset, the more banks is expose to experience a bank run or crisis. At that rate will probably not able to recover all its cost and then also make profit for the owners. But behold. Commercial bank are business oriented firm with their share holder interested on profitability. In other to satisfy its share holders, a bank might be attempted to forget liquidity and pursue profitability by investing on a high yielding less liquid asset that are profitable at the expense of liquidity which is dangerous. It is always necessary to balance liquidity and profitability in order to have efficient bank management.

The ratio or the percentage of idle cash balance in the commercial bank are to hold at any point in time and to what form to hold it is very necessary. While doing that, they should bear in mind the importance of satisfactory level of profit. There are many constraints to bank in achievement of their goal liquidity and profitability such as legal reserve requirement and they should maintain adequate liquidity to meet the unforeseen and seasonal loan demand and fluctuations of deposits. Cash reserves are also needed to take the advantage of unexpected profitability investment opportunities. In effect, banks are constrained and have to walk on a tight rope. There is the never ending of war or what I may refer to as dilemma policy commercial bank management in developing country. The Nigerian case is further aggravated by the inconsistency of the monetary policy as administered by the central bank of Nigeria. Is the reticent of the monetary coups detach. You will just walk up one morning and hear over the radio of via circular No XY2 that the central bank of Nigeria has issued a monetary circular No adjusting the private whether upward or downward.

The federal government directive on withdrawal on all federal parasttatals account from the commercial bank is one of such constraint. The stock stirred up aggressive market in the banking industry.

Although all this stock are necessary to produce the desired control of money in the economy, but such tends to give nightmare to the banking management. This directive causes ripples in the banking industry as such cause more discrepancy in the liquidity position of the commercial bank and subsequently the rate of profitability.

OBJECTIVE OF THE STUDY

The objectives of the study are;To look at the liquidity management of the bank in Nigeria with more emphasis on their investment liquidity and profitability portion. To found out why bank need to be more liquidity than any other business organization To solve the liquidity – profitability problems of the banks. To look at the effectiveness and management of the portfolio, by employing and using various approach, theories and instrument in solving their liquidity profitability problems. To examine the bank investment outlet (e.g. loan and advance investment in treasury bills. Banker unite fund, bankers certificate called money, equity participation in small and medium scale firms etc) and the degree of liquidity of such establishment shall be examined. To take critical look of the asset portfolio management of banks with a view to determine if there is a relationship between the rate of profitability and liquidity. To identify why Nigeria banks are excessively liquid and at the same time make high profit.

SIGNIFICANCE OF THE STUDY

The importance of liquidity management in the banking industry cannot be over – emphasized. Since not more contribution was made in the topic liquidity management, the researcher will carefully examine those relevant to efficient liquidity management for a successful achievement of the desired profitability.

It is hoped that the result obtained form the study will benefit the management and the non-bank financial institution, business enterprise and student of financial accounting, banking and finance student and other related course.

Readers of this study/work will be expose as regarding the input of future study. The basis of this research work is the position of liquidity of the Nigerian commercial bank as determinant of profitability.

DEFINITION OF TERM

Portfolio: this is a list of security and investment loan stock, shares and lands held/owned by a bank, individual or and organization

Portfolio management: this goes with the management of the security holding (investment portfolio of a bank or a business firm). A committee or portfolio management department or any other body might manage a portfolio.

Liquidity: it is the ability of bank to pay cash immediately when called upon to do so for all of its demand liability.

Liquidity management: it is the ability of the bank to manage the liquidity position so that neither the liquidity nor the profitability will suffer. It evolves the provision for the withdrawal of deposit, short term, and cash cyclical and satirical cash requirements.

Bank deposit: these are fund deposited in a bank. It is divided into demand saving and time deposits

Demand deposit: this also known as checking the account deposit payable on demand that is without pro notice of withdrawal.

Saving deposit: this type of deposit is usually evidence by a past book under which the depositor customer of the bank is required to notify the bank before withdrawal, but it is not the same in practice.

Asset: these are the entire property of a bank and other investment in other profitable organization.

Asset management: it is the allocation of fund, the basic objective being the maximization of profitability, solvency and regulatory constraints.

Bank run: A run occurs in a bank where there is mismanagement of liquidity and profitability.

A CRITICAL ANALYSIS OF CAUSES AND PROBLEM OF FINANCIAL DISTRESS IN NIGERIA

CHAPTER ONE

INTRODUCTION 

1.1 BACKGROUND OF THE STUDY

The importance of capital as a necessity though not sufficient condition for economic growth is recognized in development economy where it is believed that the position of adequate financial resources is a pre-requisite for industrial transformation.

Experiences in some countries notably Japan, India and Germany have shown that banks if sufficiently in their respective countries could serve as an engine of growth to greatly assist the promotion of rapid economic transformation of any nation. Banks all over the world occupy a strategic and lending position in financial sector. Many Nigerians see banks as places nobody can mess up. Hence, their accepting institutions as the safety place for depositing their money. It is equally because of the confidence they have in the industry as a whole that over the years, many of them imbedded this habit of savings, which in turn is very necessary of positive economic development of the nation. 

Ekechi (1995) said that confidence is a pre-requisite for economic recovery and sustained growth, but confidence is not a gift. It must be earned through the adjustment effort or rather confidence is rented because it is never yours and because it can be taken away anytime. The adjustable effort has to go on each and everyday”.

One legacy the structural adjustment programme (SAP) left on its trials is the increase in the number of banks in the country before the introduction of SAP in 1986. The number rose to about 127 as at August 1995. This phenomenal growth of banks was initially hailed as a healthy development in the economy because it was to spread the resources in the economy. 

Because of the importance of banks monetary authorities pay great attention to the banking industry. In this process, they are sometimes faced with the problems of how best to handle financial distress in Nigeria banking sector. Financial distress in Nigerian banking sector date back to 1930 when the industrial and commercial bank, (ICB) failed one year after its established.

As Hornby defined distress as “great pains, discomfort of sorrow caused by wants of money or other necessary things. 

John Ebhodaghe in explaining financial distress “two major problems are usually of serious concern. These are liquidity and insolvency”. He went further to explain liquidity as the inability of banks to meet its inabilities as they mature for payment while insolvent when the value of its realizable asset is less than the total value of liabilities. 

The reasons for early distress of banks are summarized in the following features, which characterized the banks since during the period. 

1. Foreign banks domination of deposit base, credit availability. 

2. Banks services tailored to the needs of the expatriates. 

3. Indigenous bank boom and failure resulting from under capitalization and poor quality management. 

4. Lack of banking, control and direction.

Recently, it was realized that the development of statistical based, early warning system for problem banks identification would greatly assist regulators on classifying banks into sound and unsound categories. Worthy of notes is Decree No. 26 of August 1992 that prescribed the following for banks to be adjusted healthy.

1. Specified cash reserve 

2. Specified liquidity ration

3. Adherence to prudential guidelines 

4. Statutory minimum paid up capital requirement Adequate capital ration 

5. Sound management. 

Any bank, which did not satisfy any or all the listed factors, is adjudged unhealthy. It must be expressed here that there exist a thin dividing line between a distressed and unhealthy banks. This is because a bank, which is unhealthy in the short-run, may become distress in the long run. At the core of distressed bank, are twos basic problems compared to liquidity the later could not be neglected because it is an ominous sign of insolvency. 

Therefore, in assessing the financial condition of a bank, it is customary to use the CAMEL framework. Also ownership structure and types of banks are important factors on explaining the financial condition of a bank. The recent NDIC report revealed that ownership structure was used to  explain the degree of financial distress seven out of eight banks, that were financially distressed were either owned or controlled by the state government. 

Another indicator of a distressed bank used in most countries of the world is classified assets that exceeds 100 percent of shareholders fund. Following from above, it is therefore reasonable to conclude that a distressed bank is one tht is technically insolvent the financial distress is caused by a number of factors including macro-economic conditions, the inhibitive policy of government capital adequacy, wide spread incidence of frauds, non-performing loans, unbraided risk by banks and so on. The effect of financial distress in Nigerian banking sector is a distressed economy. The causes and problems and the ways out of this financial distress will be discussed in details in this work. 

1.2 STATEMENT OF PROBLEM 

Financial distress in Nigerian banking sector dates back to colonial era. One of the early Nigerian indigenous banks, the industrial and commercial banks, the industrial and commercial banks (ICB) failed in the early 1930’s and between 1992 – 1994, the central bank of Nigeria (CBN) and Nigerian Deposit Insurance Corporation (NDIC) were face with the problems on how best to prevent the financial distress in the banking   sector. Within this period, more than thirty banks had been adjudged financially distressed. 

The question remains what are the causes of these financial distresses in the banking sector? According to Charles worth, research arises when there is problem to solve, peculiarities or puzzle about a phenomena or the question to attaching meaning to identify and examine the causes and problems of financial distress in Nigerian banking sector. 

1.3 OBJECTIVES OF THE STUDY 

in writing  this project, the researcher had certain objectives in mind. In line wit this following are the objectives of this write up.

1. To identify the extent to which low capital base has contributed to the financial distress in Nigerian, banking sector. 

2. To identify to the extent to which multiplicity of banks has contributed to the financial distress in Nigerian baking sector.

3. To ascertain how inefficient management has contributed to financial distress in Nigerian banking sector. 

4. To identify to a large extent how fraudulent practices has contributed to the financial distress in Nigerian banking sector. 

5. To identify the effects of financial distress in Nigerian banking sector. 

6. To recommend possible ways of preventing financial distress in Nigerian banking sector. 

1.4 SIGNIFICANCE OF THE STUDY

This study will be immense benefits to the Nigerian banking sector. This will enable them to know the causes of financial distress in Nigerian banking sector, and based on the recommendation of this study, they will know how to prevent financial distress. 

Government will also benefit. As the operators of the economy, they will know the causes and effects of financial distress in the economy. Likewise, the depositors and potential investors will also benefits. There is a need for a development conscious country like Nigeria, to evaluate the performance of her financial sectors so as not to jeopardize her development efforts. It is helped that these findings will add to existing literature on causes and problems of financial distress in Nigerian banking sector.

1.5 STATEMENT OF HYPOTHESIS 

To come out with a reliable result, the following hypothesis were formulated and tested statistically. 

1. Ho: Low capital base has not contributed to the financial distress in Nigerian banking sector. 

   Hi: Low capital base has contributed to the financial distress in Nigerian banking sector. 

2. Ho: Inefficient management has not contributed to the financial distress in Nigerian banking sector. 

    Hi: Inefficient management has contributed to the financial distress in Nigerian banking sector. 

3. Ho: Fraudulent practices have not contributed to the financial distress in Nigerian banking sector. 

    Hi: Fraudulent practices have contributed to the financial distress in Nigerian banking sector. 

1.6 SCOPE AND LIMITATIONS OF THE STUDY 

This research work covers the causes and problems of financial distress in Nigerian banking sector with reference to AFEX Bank Plc. In the cause of this study, the researcher could not carry out the work extensively due to the following constraints. 

TIME CONSTRAINTS: Time was my greatest enemy as I had to cope with my class work, assignments, home work, and the project work at the same time, and more over, most of the materials for the project work are not located in one place. 

FINANCIAL CONSTRAINTS: Finance was my major constraints since I don’t have enough fund for running around and this hindered the full coverage of the work.

1.7 DEFINITION OF TERMS 

BANKS: Banks are financial institutions, which hold themselves out to the public (individuals, firms, organization, and governments) by accepting deposits and giving out advances as well as performing other customers. 

FRAUDS: Fraud is intentional distorting twisting or changing of financial statement or using criminal deception to deceive someone in order to achieve illegal advantage

LIQUIDITY: Liquidity is inability of a bank to meet its liabilities as they mature for payment. 

INSOLVENCY: Insolvency is when the value of realizable assets of a bank is less than the total value of its liabilities. 

CAPITAL ADEQUACY: Capital adequacy is when banks through proper fund management has enough capital to serve as a fall back and at course, shock absorber in the event of losses resulting from business transactions. 

SHAREHOLDERS: shareholders are the owners of the bank, whose names were described to the memorandum of the bank when the bank is registered. This is done through the purchase of the bank’s shares. 

PAID UP CAPITAL: This refers to that part of the issued capital, which has been paid-up.

DISTRESS: This means great pains; discomfort or sorrow caused by wants money or other necessary things.

A CRITICAL ANALYSIS OF THE USE OF FINANCIAL REPORT IN ASSESSING BANK PERFORMANCE

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF STUDY

       A farmer, who plants corps, expects result, similarly to student who sits for examination expects results. The same 5 also true of an investor.

For the farmer, the result might be communicated to him in the form of a bumper harvest. It result sheet or a report card would usually sufficed for a student. However, in the of an investor, the result is communicated through the financial reports.

    Financial reports are law to be prepared by every limited liability company; these limited liability companies abound in virtually all sector of the economy.

   Every company shall cause accounting records to be kept. The accounting records shall be sufficient to show and explain the transactions of the company and shall be such as to disclose with reasonable accuracy, at anytime the financial position of the company.

   In the banking industry, financial reports are of great interest to the general public because the banks directly or indirectly interact with people.

    This public interest has caused companies (including banks) to accept social as well as economic, financial and legal responsibilities and has created a consequence, a growing need for the communication of information to account for the results which are of considerable interest a wide range of individuals and organizations.

   So, it becomes very imperative for reliable information to be circulated to interested parties which can enable them to acquire an essential knowledge of the way is which companies particularly the bank are performing in relation to the public interest. This fact is further educated by the recommendation of the working party set up in Britain by the Accounting standard committee in October 1974 under the chairmanship of Derek booth man which took a study of the scope and aims of publisher financial statements.

   The committee recommended that:

      “The fundamental objectives of corporate report are to communicate economic measurement of the reporting entity useful to those having reasonable right to such information”

     It is not an over statement when one says that the banking industry is the flume on which the national   economy rotates. This mammoth, impact upon a country economy therefore makes it a public affair is everybody in the country has a right to know what such organizations are doing, more so all information, necessary to explain the organization’s activities fully should be provided in the annual reports.

One of the most significant aspects of the information system of business enterprises in an economy is that which deals with the communicate of financial data, especially in describing business profitability and financial position. This information is important because it attempts to partial the economic resources of the enterprises and the financial results, which have been achieved by its management when those resources have been put to use. It attempts to reveal how effective management has been in resources utilization as well as the financial reward available to compensate for risk taken by various suppliers of capital.

1.2 STATEMENT OF THE PROBLEM

         The genuineness or other wise of financial reports has attracted diverse opinions from different quarters, such opinions can come from the general public, tax authorities, shareholders, creditors with long or short term interest, financial analyst and potential investors.

They argue that the financial reports do not usually give an accurate data about the actionties of such business concerns, for example, the idea of stating assets at their historical cost do not favour most investors as they argue that inflation is not usually taken care of, though the real value of such assets might have been eroded.

Again since the financial reports prepared by managements, the shareholders and others argue that there would usually be some elements of bi as on the part of management in the disclosure of management’s financial ineptitude.

But in any case the management claims that some inherent problems would usually affect the accuracy of such reports. It is therefore the intention of this researcher to delve into the matter to enable him establish a relationship between financial reporting and performance evaluate in a bank.

1.3 OBJECTIVES OF THE STUDY

Companies including those in the banking industry have had to face the onerous task of presenting a credible and generally acceptable financial statement in their annual reports, to the various people to whom they own such obligations. The purpose of the study is:

a. To determine the various financial reports used by banks.

b. To ascertain the problems of using financial reports to assess performance of banks.

c. To examine the use of historical cost convention adopted by banks in stating this balance sheet items on investors.

d. To determine of there’s a relationship between financial reporting and performance evaluation of a bank.

e. To offer recommendations and solutions on the best way financial reports could use in assessing bank performance.

1.4 RESEARCH QUESTIONS

a. What impact has financial reporting on bank performance with respect to the financial position of the bank?

b. How does financial statement assess the bank performance?

c. Does financial reports disclosed financial impetitude of bank mangers to the shareholders?

d. What are the problems associated in using financial reports to assess bank performance?

e. How do we know a reliable financial report?

f. Has financial statement of banks influence your investment decision?

1.5 RESEARCH HYPOTHESIS

         Base on the statement of problem and objections of this research work the following general hypothesis are formulated:

Ho Investment decision, base entirely on the financial statement will not lead to poor and lazy decisions.

Hi Investment decision based entirely on the financial statements will lead to poor and lazy decisions.

Ho The efficiency of financial reports is great affected by inflationary trends in the economy.

Hi The efficiency of financial reports is not greatly affected by inflationary trends in the economy.

Ho Financial report are not a true in director of banks performance.

Hi financial reports are a true in director of banks performance.

1.6 SIGNIFICANCE OF THE STUDY

     The banking industry is a very important sector of the economy. This is because banks can determine the direction of growth or development of the economy trough the financial service rendered by banks. The financial services which includes, funds mobilization, safekeeping and custodianship, funds transfer, foreign exchange transaction equipment leasing, extension of loans and advances, investment in securities, bill discounting etc.

       Investment key sector of the national economy of which the banking industry is one becomes a goal-getters priority. Owing to this, it becomes necessary that financial reports presented by banks satisfy the need of the users of the reports.

     Specially, at the end of this study, we shall   have been able to establish:

1. Whether or not the financial reports affects investment in the banking industry.

2. Whether or not the annual financial report currently reflect the inflationary effects.

3. Whether or not banks follow rigid accounting practices.

    The emphasis of this research is not to discuss the determinants of performance, but to establish a relationship between financial reporting and performance so that potential investors is in banking industry may clearly define the stand.

1.7 SCOPE AND LIMITEDATION OF THE STUDY

    The aim of the study is to examine, the use of financial reporting in assessing banks performance, however it will be restricted to investigations carried out on union bank of Nigerian Plc.

    To enable the research have a broad view, the study will not be based on one branch. A study of some selected branches of the bank will also be carried out.

    But in any case, the following among others are the numerous constraint, while are envisaged;

LITERATURE:      The dearth of related books and journals will no doubt affect the quality of the research.

TIME:     The greatest employer of man, which is time was not in my favour through I manage it considering the time allocated to my studies, fellowship and the project.

FINANCE:    The research work generally involves money but considering my stand as a student. I was limited by financial in achieving my gim of have a population rather I found my self in using sample size, even visit to my case of study.

RESPONSE RATE:        The information to be analyzed in the study will be limited to those who would  respond voluntarily to the questionnaire.

PAUCITY OF INDUSTRY:  At the course of my research I come to release that many banks dose not have any form inter-relationships which make things difficult for me in using one set of information generated as touching planning and control in UBN to generalize issues.  That leads me into more research, which will continue even after this profit.

1.8 DEFINITION OF TERMS

OUDITING:     The objective examination of financial statements initially prepared by management by a third party other than the prepared or used with the goal of establishing the fairness of representations made therein and reporting on same a guides to interested users. 

ATTEST: To assume responsibility for the fairness and dependability for the fairness and dependability of financial statements. 

BANKRUPT: Inability of person to meet his liabilities as they mature.

FRAUD: Misrepresentation by a person to be untrue or made with reckless indifference as whether the fact in true with the intention of deceiving the other party and with the result that the other party is injured.

FINANCIAL STATEMENTS:  This covers balance sheets, income statement or profit and loss accounts notes and other statement and explanatory materials.

GOING CONCERN: Continuing in operation for the foresable future with the assumption that the enterprise has neither the intention nor the 

LIQUIDATION: Process of winding up of a company thereby brings to an end its corporate existence.

TRUE AND FAIR VIEW: The opinion of an auditor, which depicts compliance, will generally accepted accounting principles and full of fair disclose of facts.

THE PROBLEMS OF DEBT MANAGEMENT IN FINACIAL INSTITUTION. (A CASE STUDY OF UNION BANK PLC GARDEN AVENUE ENUGU)

CHAPTER ONE

 1.1    BACKGROUND

Financial institutions is that sector of the economy providing the community with money balances and payment up of banks and sector of the economy is made up of banks and non-banks financial institutions like financial house, mortgage house and other institutions that provide financial services and intermediation to the various segment of the economy.

 In modern society, economic prosperity and progress depend largely on level of savings in the nation.   It happens that some one’s savings is made available to an investor for productive venture like what happens  in commercial banks.  When this happens a debt is created. A debt which has been described as an obligation to made future payment. It is against the borrowers promise to made future payment.  As a result of this the owners of these funds faces the risk of not getting their money in good time or losses it entirely when the custodian of these funds cannot mange then well hence debt management becomes a sing anon to guarantee the confidence of the individual depositor that his money is safe-debt management involves arrangement put in place for repayment of these credit facilities.

In the same vain it also fulfill a wider role in safe guiding the stability of the individual bank and thus the banking system as a whole. At this juncture ,the researcher will mention that this work is based on the constrains in relation with debt tagged the problems of management inNigeriafinancial institution (A case study of union bankPlc Garden AvenueEnugu).

Recently, the banking sector undergo a traumatic experience whereby some banks were judged distressed, this however was a direct manifestation of improper debt management.

 1.2  STATEMENT OF PROBLEMS.

The fundamental role banks and non-banks financial institutions is to intermediate between the surplus deficits sector of the economy.

Ensuring that inventible that will generate new valves at make the economy grows.

In performing this role, banks are exposed to credits risks, for instance, the possibility that the borrower will not repay the credit granted them when it falls due, or even fail  out right to repay paragraph when this possibility becomes a reality a bank is said to be set with problems of debt loan and other credit facilities this however has made financial

 1.3   OBJECTVES OF THE STUDY

However, union bank Plc is not distressed but market failure is inevitable given the nature of banking.  As emphasized by (Dale 1984) the financial condition of a bank s not determine even by analysis with sophisticated techniques at their disposal, every important, since this problems are man made.

You will agree with me that all banks are faced with numerous problems in managing to do debt.  The research deemed it timely to do a research on these problems with a view to

1.       Study the credit administration in UBN with a view to identifying loose ends.

 1.4  RESEARCH QUESTIONS

How knowledgeable are you in debt management issues?

To what extent have the effort toward debt recovering achieved result?

What are the reasons, you may consider responsible for the way your debtors are responsible to their debt management?

 1.5  SIGNIFICANCE OF THE STUDY

The research paper on completion will be of immense importance to the following sectors of the economy.

1.       The Federal Government

2.       Banks and the other Federal institutions

3.       General public

4.       Other researchers

By this project work, the federal Government will appreciate the more how threatening bad debts problems loans are to the banks and other financial institutions.  The banking sector is not a mean sector especially when it is remembered that anything that affects it will conch revering other sector.  The knowledge of how much financial institution had been suffered under the weight of heavy loan default will make the federal Government to be more the federal Government to be more forth coming when suggestions are made on how to deal with the chronic defaulters especially the state government who engage in the practice of borrowing with reckless abandon.

General public this work will go a long way to adult the general public most especially the beneficiaries of credit facilities.  The borrowers of funds in these institutions to appreciate the need to repay these loans as at when due, bearing in mind that these money borrowed is some one’s also savings.  And also the need to involved these loans in a productive and revenue yielding ventures that will boost growth of the economy.

This work will also serve as a source of data or from the basis for other researchers who intend to carryout a further research on the topic.  It will help them in the literature review.

 1.6   SCOPE OF THE STUDY

The subject matter of this research into evaluate the problems of debt management inNigeriafinancial institutions.  In doing this particular reference were made to the union bankPLc Garden AvenueEnugu.  The period examined is from 1992 to date.  Nevertheless, references could be made to other banks just for the purpose of clarity and vivid under4stand of the subject topic

 1.7    LIMITATIONS

The researcher considered precedent to limit the researcher to Eastern zonal offices of union bankPlc Garden AvenueEnugu.  This was done for the fact that the bank co-ordinates the activities of all the other banks branches within the Eastern region and time would not permit coverage beyond these limit.

Apart from the success made in carryout this stud it must not fail to disclose the descending attitude of the top management of union bank PLc.

The public relation officer and the operation manager who though welcomed me but cold not go further in giving me any useful information as regard my project topic because of what they call official top secrecy.

Likewise, respondents from Diamond bank Nigeria Limited, first bank Plc also felt that supplying certain information competitors, rather they refer you to their co-operated headquarters atLagosorAbuja.

 1.8   DEFINITION OF TERMS

An Investor: person who invest money in a business, Customers of the

bank who deposits money or but share from the bank.

Debt:  Payment which must be made but has not yet been paid to somebody or institution.

Economy:   Avoidance of waste of money or funds.

Financial institutions:    These are the custodies of funds and those raises

funds for other investment.  Like banks and insurance company’s.

Loan:    Certain amount of money lent out to customers.

THE IMPACT OF REVENUE GENERATION IN LOCAL GOVERNMENT IN NIGERIA (A CASE STUDY OF SELECTED LOCAL GOVERNMENTS IN KANO STATE)

CHAPTER ONE

INTRODUCTION

  1. BACKGROUND OF THE STUDY

One area which has remained neglected over time by the local governments in Nigeria is revenue generation. Revenue generation in Nigeria’s local government is principally derived from tax. Therefore, taxation is an internal source of government revenue within the domestic economy. Its collection and service to the government depends largely on the government itself. Taxation has been described in many ways and for the purpose of this study it will be seen as compulsory levy imposed on a subject or upon his property by the government having authority over his property through its agencies with the aim of providing, maintaining and improving social facilities in the communities at large and for which the tax payer has no quid pro que. Nigeria has three- tiers of government systems, these are; (i) The federal government (ii) The state government and (iii) The local government. The essence of this division of government into federal, state and local levels is to enable the government exercise her administration easily and effectively. However the 1979 constitution spells out the functions of each level of government. Generally it can be said that the governments are responsible for the provision of the collective (social) goods and services on a non- commercial basis as well as the provision of other social and economic services.  In order to meet up with the foretasted goals and services, the government needs to collect revenues. Local government, which this work emphasizes on, can be described as the government at the local level, exercised through representative council, established by law to exercise specific power within definite areas. The government of such body is selected or otherwise locally selected. The administering of government at local level in Nigeria traced as far back as colonial period, when native authorities were established in their rudimentary forms, that is in their own ideas. They represented a system of indirect rule, which sought to establish a form administration through traditional authorities. Between 1950 and 1955, the first elected local government council based on the model was shadbushes in logos and in the former Eastern and western Region. Though, the traditional members constituted a maximum of 25 percent in most of the councils, the emergence of members elected on a political basis instigated the traditional rulers to gradually withdrawn from active participation in local administration in Nigeria. Presently, local government administration is still in existence assigned with numerous. Responsibilities like, bawling of market square, provision of pipe-born water, motor parks, rehabilitation of local and rural roads, sanitary and health inspection, maternity home and dispensaries e t c. Finally, local governments have two (2) main sources of revenue or fund. They are (i) External sources of fund. (ii)  Internal sources of fund. The External sources of fund include; (a) Statutory allocations from the federal and state government (i.e., 20% considered federal revenue and 10% of internally generated state revenue). (b) Special grants which aim at assisting local government finance their aforementioned projects. In addition, local government source fund internally through receipts on rent and rates on their properties, tenement tax, earning from commercial undertaking, interest payment and dividend, licenses, fees and fines etc. Revenue generation is the nucleus and the path to modern development. This is because local government as the third tier of government and the closest to the people especially in the rural areas needed revenue to provide basic social amenities to the people. But it is unfortunate to note that the local government management have not lived up to expectation especially to provide basic social amenities to the rural people. Development is a sine qua non for modern civilization. In order to carryout development at all nooks and crannies of the society, it is the responsibility of the Local Government to provide direct development to people to a certain level. Development is associated with funds and much revenue is needed to plan, execute and maintain infrastructures at the state level. The needed revenue generated for such developmental projects, like construction of accessible roads, building of public schools, health care centres, construction of bridges are generated from taxes, royalties, haulages ,fines, and grants from the states, national and international governments. These funds could either be obtained internally or externally. Thus, the Local Government cannot embark, execute and possibly carryout the maintenance of these projects without adequate revenue generation.

  1. STATEMENT OF THE PROBLEM

There are a lot of problems that hinders revenue generation by Local governments in Nigeria. The relevance of the local government councils as the government at the grassroots is measured by the quality and quantity of services rendered to the rural dwellers. For the local government council to render meaningful services, in form of provision of basic amenities, construction and maintenance of roads, creation of employment opportunities for the citizens and payment of staff salaries as at when due, money is undoubtedly required without the availability of revenue, a local government council will not only be incapable of serving the people but will undoubtedly crumble. It therefore, follows that for the local government to discharge its statutory functions effectively, it should not only be adequately funded but such fund should be efficiently applied. Tax avoidance and delinquencies are among the problems confronting most local governments on revenue generation, as most people of the society device some means source maximum reduction in the amount to be paid as tax obligation on the date it is due, thereby, escaping tax liabilities. Inability of most people of the society to pay up amount due for rent and rates on local governments properties. This hinders local governments as regards revenue generation, as most people lack fiancé and others not willing to pay – up. Inadequate operational vehicles and other facilities confront local governments as a problem in generating revenue. Revenue generation needs mobilization and most local government do not have enough, which would have enable them to move easily from one part of the area to another for the collection of various fees. Another problem hindering local government revenue generation lies among the staff. Many staff lack job related in service training, and some have poor educational background, some are not dedicated, diligent and honest. Often they do collude with tax or ratepayers to defraud the government. All these problems will not only affect the local governments but, every member of the society and the nation in general. This is because, these problems will not enable most local governments to carry out or problem their statutory assigned functions effectively thereby, leading to and definitely, affects the economic growth and development of the nation (Nigeria).

  1. AIMS AND OBJECTIVES OF THE STUDY

The major aim of the study is to examine the impact of revenue generation in Local government in Nigeria. Other specific objectives of the study include;

  1. To examine the Local Government Administration in Nigeria.
  2. To determine the sources of revenue generation in Local Government in Nigeria.
  3. To examine the impact of revenue generation on Local Government performance.
  4. To examine the functions of Local Government in Nigeria.
  5. To examine the relationship between generated revenue and local government capital projects.
  6. To recommend ways of curtailing revenue generation problem.

1.4. RESEARCH QUESTIONS

  1. How is the Local Government Administration in Nigeria?
  2. What are the sources of revenue generation in Local Government in Nigeria?
  3. What are the impacts of revenue generation on Local Government performance?
  4. What are the functions of Local Government in Nigeria?
  5. What is the relationship between generated revenue and local government capital projects?
  6. What are the recommended ways of curtailing revenue generation problem?
    1. RESEARCH HYPOTHESIS

H0: Revenue generation has no significant impact on local government performance.

H1: Revenue generation has a significant impact on local government performance.

  1. SIGNIFICANCE OF THE STUDY

From the outlook, there is need for the local government to improve their performance. However, the research is significantly considering the closeness of local government to the grassroots’ people and the need to utilize substantial revenue for its various sources in addition to federal and state statutory allocation for developmental purpose. The study will help to identifying some means of generating revenue that has been neglected over years. It will also be beneficial to the grassroots because improved revenue generation means improved standard of living in form of provision of social amenities such as road, hospital, park, drinkable water, rural electrification etc. The study will be educative as it will be a reference point for researchers.

  1. SCOPE AND LIMITATION OF THE STUDY

The study is restricted to the impact of revenue generation in Local governments in Nigeria, a case study of selected Local Governments Areas in Kano state.

  1. LIMITATION OF THE STUDY

Financial constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview)

Time constraint: The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

  1. DEFINITION OF TERMS

Impact: Impact in this study refers to the effect of revenue generated on service delivery by local government. It also determined the extent to which local government was able to deliver local services with resources at its disposal.

Local Government: Is defined as Government at the local level exercised through representative council established by law to exercise specific powers within defined areas. These powers should give the council substantial control over local affairs (including staffing) and institutional and financial powers to initiate and direct the provision of services and to determine and implement projects so as to complement the activities of the state, and Federal Government in their areas, and ensure, through the active participation of the people and their traditional institutions, that local initiative and response to local needs and conditions are maximized (Federal Republic of Nigeria, 2013).

Revenue: According to 2009 constitution, revenue is defined as any income or returns accruing to or derived by the government from any source and include any receipt however described arising from the operation of any law, and receipt however, described from or in respect of any property held by government, and any returns by way of interest or loans and dividends in respect of shares or interest held by government in any company or statutory body. However, revenue can also be regarded or referred to as tolls, taxes, rates, fees, royalties, rents and other receipts of government from whatever sources such as proceeds from loans given out (Section 162(10) of 2009 Constitution). Revenue accruing to any tier of government may be classified as recurrent or capital. While the former is generated on day-to-day basis throughout the year, the latter arises once in a while and in a larger proportion. They are also described as internal and external sources of revenue respectively. Nevertheless, the word revenue will be used in the context of this research to mean any amount of money coming into the local government from whatever sources and which the local government has power of appropriation.

Generation: This is the process of sourcing revenue for the local government in carryout their aim and objectives.

THE IMPACT OF BIG 4 AUDIT FIRMS ON THE PERFORMANCE OF LISTED FIRMS IN NIGERIA (A CASE STUDY OF LAGOS STATE)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Financial report is one of the most useful information sources for investors, lenders and other creditors in making decisions (IASB 2010). Especially, the financial reports audited by the Big-4 audit firms (Deloitte, KPMG, EY and PWC), that are guaranteed by the perennial reputation and commitment to the quality of audit services (Frankel et al. 2011, Hope et al., 2013). The information from the financial report can reflect the financial health and the nature of a business. Using this information the investors can estimate, analyze and decide to invest effectively. In order to ensure the stock-market to operate in a fair, transparent, and effective way the financial report of each firm must be open, explicit, full, true and timely. In which, timeliness is one of the qualitative characteristics that enhance the usefulness of information that is relevant and faithfully represented (IASB, FASB 2010, QC21). Within this study, authors focus on the timeliness aspect in the financial report publishing after the audit, in the other word, the timeliness of audit report. The timeliness of financial report is also considered as one of the efficient competitive factors in business that a firm should pay attention to. It’s clearly that a timely financial report of a firm can attract attention of investors and more or less it creates goodwill of financial report users. There are many researches showing the importance of timeliness in qualifying the financial report. Timeliness in an important tool in financial information as it received attentions from the accounting regulators and listing authorities worldwide (Abdelsalam & Street, 2007). The timeliness of financial report can reduce the risk of insider trading, information leaks, and rumours on the stock market (Owusu-Ansah, 2011). Al-Ajmi (2008) suggests that the information on financial report should be published in short periods of time; otherwise some values may be lost. Especially, for the developing economies (for example, Vietnam) the timely financial report supply of listed companies is very important, because of the fact that sources of information such as newspapers, conferences, specialists in analyzing, forecasting are under the appropriate development level (Karim & Ahmed, 2015). Because of the above reasons, in recent years, factors affecting the timeliness of financial report have attracted the attention of local and international researchers. These factors have been considered under various conditions, regular factors such as the audit firm for the listed companies (Big 4 audit firms), the size of audit firm, and factors related to firm characteristics management are also widely used. In this paper, the authors study the effect of audit firms (Big 4 audit firms) and the firm performance (measured by accounting values with ROE and ROA indexes) on the timeliness of financial report of firms listed on the stock market (SM) in Nigeria. Our study contributes to the financial reporting and corporate governance literature by providing empirical evidence of the impact of audit firm and firm performance. Our results suggest that the audit firm’s reputation and firm performance measured by ROE index positively affect the performance of listed firms.

1.2 STATEMENT OF PROBLEM

Audit quality plays an important role in maintaining an efficient market environment; an independent quality audit underpins confidence in the credibility and integrity of financial statements which is essential for well functioning markets and enhanced financial performance. External audits performed in accordance with high quality auditing standards can promote the implementation of accounting standards by reporting entities and help ensure that their financial statements are reliable, transparent and useful. Sound audits can help reinforce strong corporate governance, risk management and internal control at firms, thus contributing to (Internal Audits Board, 2011). The statutory audit can reinforce confidence because auditors are expected to provide an external, objective opinion on the preparation and presentation of financial statements. Auditors need to be independent in the opinions they express, while the work they have to do to form their opinions is highly dependent on and rooted in the real world and may become challenging in some business environments in Nigeria. It is against this background that this research work is carried out. The purpose of this study therefore is to determine the impact of big 4 audit firms on the performance of listed firms in Nigeria. There have been concerns about audit quality in the present environment, where severe failures have come to light, for example; Enron scandal of 2001; Parmalat in 2003; Cadbury Nigeria Plc in 2006 and Afribank Nigeria Plc in 2009 (Ajani, 2012; Miettinen, 2011). It has been found that the perceived reliability of audited financial information has declined. In contrast, the perceived relevance of audited financial information has increased. The effect of audit quality on performance has recently received attention from researchers in the western world. Studies have shown that big 4 audit firms have an impact on the performance of an organization (Beasley, 1996; Heil, 2012; Miettinen, 2011). While these studies provide evidence from vibrant capital markets, very little research on the relationship between audit quality and the performance of organizations has been conducted in countries where capital markets are less developed. Thus, it is evident that there is a need for research on big 4 audit firm and the performance of listed organizations in Nigeria.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine the impact of big 4 audit firms on the performance of listed firms in Nigeria. Other general objectives of the study are:

  1. To examine how Big4 status influences the audit fees paid by the listed companies.
  2. To examine the financial literacy of audit committee members and its influence on audit quality.
  3. To examine the impact of big 4 audit firms on the performance of listed firms in Nigeria.
  4. To examine the factors affecting big 4 audit firms and audit quality.
  5. To examine the relationship between big 4 audit firms and performance of listed companies in Nigeria.
  6. To examine the measures recommended to enhance audit quality in listed firms by big 4 audit firms.

1.4 RESEARCH QUESTIONS

  1. How does Big 4 status influence the audit fees paid by the listed companies?
  2. How is the financial literacy of audit committee members and its influence on audit quality?
  3. What are the impacts of big 4 audit firms on the performance of listed firms in Nigeria?
  4. What are the factors affecting big 4 audit firms and audit quality?
  5. What is the relationship between big 4 audit firms and performance of listed companies in Nigeria?
  6. What are the measures recommended to enhance audit quality in listed firms by big 4 audit firms?

1.5 RESEARCH HYPOTHESES

H0: Big 4 Auditing firms has no significant impact on the performance of listed companies in Nigeria.

H1: Big 4 Auditing firms has a significant impact on the performance of listed companies in Nigeria

1.6 SIGNIFICANCE OF THE STUDY

The need for studies on the impact of big 4 audit firms and performance of listed firms is important in a country like Nigeria where organizations are striving to gain credibility among local and global investors. While previous researches have focused on the relationship between audit quality and financial performance in developed countries, there has been relatively little empirical work on this relationship in developing countries. This topic is significant for business management, shareholder and the overall financial community because of the best use of assets comes from internal auditing from its responsibilities especially after financial crisis all over the world that makes internal auditing significant in monitoring and evaluation of management performance. This study keeps track of developments and trends in the field of auditing Whether in the field of professional standards or practices and modern methods and try to apply this Development in Nigeria

1.7    SCOPE OF THE STUDY 

The study is based on the impact of big 4 audit firms on the performance of listed firms in Nigeria, a case study of Lagos state.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Audit: An audit is a systematic process of objectively obtaining and evaluating the accounts or financial records of a governmental, business, or other entity. Whereas some businesses rely on audits conducted by employees—these are called internal audits— others utilize external or independent auditors to handle this task (some businesses rely on both types of audits in some combination).

THE ASSESSMENT OF TAX ADMINISTRATION IN LAGOS STATE

CHAPTER ONE

INTRODUCTION

  1. BACKGROUND OF THE STUDY

Management are engaged with different types of activities that require quality and reliable information. In contrast, managers of a specific business often times need or desire far more detailed information. This information must be tailored to specific decision-making tasks of managers, and its structure becomes more “free formed.” Such managerial accounting information tends to be focused on products, departments, and activities. In this context, the management process is intended to be a broad reference to encompass marketing, finance, and other disciplines. Managerial accounting is regarded as providing information in support of the inner management processes. Several organizations check with their internal accounting units as departments of strategic finance. This title is additional reflective of their wide selection and scope of duties. Social control accounting is kind of totally different from money accounting. External reportage rules square measure replaced by internal specifications on however knowledge square measure to be accumulated and conferred. Hopefully, these internal specifications square measure sufficiently logical that they permit sensible economic deciding. As an example, specific reportage periods could also be replaced with access to period of time knowledge that changes fast responses to ever changing conditions. And, forecasted outcomes become additional essential for designing functions. Likewise, value info ought to be disseminated in an exceedingly method that managers will target (and be command responsible for) those business elements (“segments”) below their locus of management. The effectiveness of accounting data system not solely depends on the needs of such systems however additionally depends on contingency factors of every organization. Accounting information systems equally measure aforesaid to be effective once the knowledge provided by them serves wide the necessities of the system users. Shoommuang (2011) examined how effective management accounting implementation affects decision making by analysing the relationship between corporate strategy and top management. David and Marcel (2006) analysed the relationship between management style and management accounting system and the effect on organizational performance and concluded that accounting information system is designed to transmit information to the decision makers, having capacity to influence the orientation, direction and formality of the decision making style. A proactive management style would require an innovative Management accounting system design to cope with the uncertainty and to optimise decision making whereas a reactive management style would require traditional management accounting information system to provide information suitable for managing routine, regular and programmable activities. Brigitte and Wolfgang (2013) emphasized the importance of information requirements for managers in decision making when there is absence of agency conflicts, they argued that information available to managers in managing business is the same information available to investors in assessing performance and future prospects. Concentration is on two central useful qualitative characteristics of accounting information: predictive ability and feedback value. Pfaff (1995) as cited in Brigitte and Wolfgang (2013) explained that decisions need to be re-evaluated periodically, the decision-maker wants to decide whether to continue without change or whether to abandon or alter the course of action in question; for this purpose, performance in the sense of the progress along the lines of the original plans needs to be determined; decisions are based on a comparison of projections as well as with the alternatives hence the need for forward looking information as well as control information. The focus is on the need for consistency and comparability in the information flows between financial and management accounting. Their smooth go must be secured by a reporting organization, corresponding to the strategic orientation of the enterprise. In this connection, it will be necessary to carefully approach the development of the accounting policy on the basis of coherence in the efforts of the chief accounting (or financial) officer and the executive director. In the absence of such coherence in their actions, the processing of accounting data for management purposes will be complicated. As a result, the potential for cost optimization as an important precondition for successful price competitiveness will be diminished. Following such approach, the accountability will become part of the tools for strategic management and the repercussion of strategic solutions on cost management will turn to be one of the main challenges for managers. Moreover, the evaluation of accountability in a company will be based on its impact on the implementation of corporate strategy.

1.2 STATEMENT OF PROBLEM

The success of any organization in decision making, planning and controlling depends on the availability of the information at her disposal. It was observed that many organizations have been inefficient as a result of inadequate, irrelevant, unreliable and untimely information upon which their actions was based, thereby having overall negative effect in the organization and putting the organization at a disadvantageous position. Also the going concern of any organizations depends on its ability to meet its target objectives to justify its existence, and this objectives can be met when relevant and accurate information are available, where effective and efficient accounting systems are lacking, the organization would wind up and its contribution to the society would be lost, hence this study seeks to uncover how accounting information system has aided managerial performances and efficiency of selected Small and Medium Enterprises in Nigeria.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine management account information as an aid to organizational managerial function. Other general objectives of the study are:

1. To examine the roles played by management accounting information in determining the management efficiency and performance in an organization.

2. To examine the management accounting information as an aid to organizational managerial function.

3. To examine the effect of management accounting information on organizational managerial function.

4. To examine the uses of management accounting information in Small and Medium Enterprises.

5. To examine the relationship that exists between management accounting information system and strategic decision making process.

6. To suggest ways in which management of accounting information will aid in assisting the private firms to achieve their goals and objectives.

1.4 RESEARCH QUESTIONS

1. What are the roles played by management accounting information in determining the management efficiency and performance in an organization?

2. How does management accounting information helps in organizational managerial function?

3. What are the effects of management accounting information on organizational managerial function?

4. What are the uses of management accounting information in Small and Medium Enterprises?

5. What is the relationship that exists between management accounting information system and strategic decision making process?

6. What are the ways in which management of accounting information will aid in assisting the private firms to achieve their goals and objectives?

1.5 RESEARCH HYPOTHESES

H01: There is a significant effect of management accounting information on organizational managerial function.

H02: There is a significant relationship between management accounting information system and strategic decision making process.

1.6 SIGNIFICANCE OF THE STUDY

The study findings will be of immense importance in the sense that they will assist management of small and medium enterprises to realize how to carry out their managerial responsibilities. Since management accounting information is dynamic and full of potentials not yet tapped, the comments and recommendations of this work will, hopefully, assist small and medium enterprises and all businesses to improve on their managerial functions and decision making. In essence, the study will be beneficial and add knowledge to students so as to enlighten them more on management accounting information and managerial functions. The study shall therefore serve as a reference for further research.

1.7    SCOPE OF THE STUDY 

The study is based on the application of management accounting information as an aid to organizational managerial function: case study of SMEs.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Management Accounting: The process of preparing management reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions.
Unlike financial accounting, which produces annual reports mainly for external stakeholders, management accounting generates monthly or weekly reports for an organization’s internal audiences such as department managers and the chief executive officer.

Organization: A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems they affect and are affected by their environment.

Managerial Function: Managerial functions refer to the different roles and responsibilities of managers, who need certain skills to execute these functions. Small businesses, especially start-up companies, may not have the resources to hire managers for each of their functional and product areas. This means that small-business managers have to be flexible enough to learn a range of skills and perform different roles.

Information: These can be said to be facts needed or received by a person, or group of persons which is or will be useful to them.

THE ADOPTION OF INTERNATIONAL PUBLIC SECTOR ACCOUNTING STANDARDS ON THE ACCOUNTABILITY OF FEDERAL GOVERNMENT MDAS, ABUJA

CHAPTER ONE

INTRODUCTION

  1. BACKGROUND OF THE STUDY

Over the last thirty years the public sector has gone through a wave of reforms worldwide, usually towards the adoption of business-like practices in order to enhance improved utilization of public resources. These reforms have led changes in the mode of presentation of financial reports in the public sector. Adegbite (2010) argues that these changes become imperative because the modern day government day needs vital financial information in order perform business effectively. In recent times, countries of the world have set the standards of financial reporting in their individual territories. According to Earnest and Young (2012) globalization introduced into being an ever increasing collaboration, international trade and commerce among the countries of the world, hence there is need for increase in uniformity in reporting across the globe. The agitation for the introduction of a unified accounting standards has been the primary driver of International Public Sector Accounting Standards for public sector financial reporting. While the commercial entities across the world are moving toward international financial Reporting standards (IFRS), governments are harmonizing with International Public Sector Accounting Standards (IPSAS).The Public sector includes entities or organizations that implement public policy through the delivery of services and the redeployment of income and wealth, with both activities supported mainly by compulsory tax or levies on other sectors. This also comprises governments and all publicly owned, controlled and or publicly funded agencies, enterprises, and other entities of government that deliver public programs, goods, or services. Public sector accounting is a system or process which gathers, records, classifies and summarizes as reports the financial events existing in the public provide information to information users associated to public institutions. Omolehinwa and Naiyeya (2003) opine that International Public Sector Accounting Standard (IPSAS) is the center piece of the “global revolution in government accounting in response to calls for and transparency. Apart from accountability and transparency of IPSAS, is it a crucial perquisite for accessing funds from World Bank. Developing countries are also admonished by international organizations which provide financial assistance to them to switch over to IPSAS. Other conations irrespective of their political and economic systems are encouraged to switch over to IPSAS. Ngama, (2012) reports that IPSAS has become de facto international benchmarks for evaluating government accounting practices worldwide. For these reasons, IPSAS warrants the attention of accounting policy-makers, practitioners and academics alike. The conceptual issues are problem areas or debatable points on the substance of IPSAS. Institutional issues, on the other hand, relate to the governance and process of setting IPSAS. IPSASs supervise the recognition, measurement, presentation and disclosure requirements as it regards to transactions and events in general purpose financial statement. These kind financial reports are characterized by the fact that they are issued for users who are unable to demand financial information to enable them meet their specific information needs. Some scholars argue t is costly everywhere to produce and disseminate information, hence governments in all types of political systems lack the economic incentives to do so. Olamide, (2010) further document that political systems exert a greater demand for government accountability and transparency than others; for example, representative democracies are more demanding than authoritarian and totalitarian political systems. A democratic government is obliged to be more responsive to information demands placed upon it. This would be the case in developed countries and developing countries alike. However, the opportunity cost of resources used in improving government financial information is higher in developing countries than in developed countries. Ngama, (2012) opines governments in democratic developing countries may will to undertake government accounting reform but restrained by the financial involvement. The author further argues that governments in nondemocratic developing countries are both unenthusiastic and unable to afford cost of switching over to IPSAS. Local accounting standards in Nigeria were set under the Nigerian Accounting Standards Board Act of 2003 by the Nigerian Accounting Standards Board (NASB) now Financial Reporting Council of Nigeria. Nigeria is supposed to switch over to officially over to IPSAS 2014 but it is surprising that no government (federal, state or local) agency has really prepared it report using IPSAS. This paper seeks to examine the adoption of IPSAS adoption to accountability of federal government MDAs.

1.2 STATEMENT OF THE PROBLEM

The preparation and presentation of financial statement at each level of government have pose series of problems worldwide. Over the years, government accounting has been anchored on cash basis of accounting while private sector accounting has been predicated on accrual basis. Whereas the accrual basis has been working perfectly well in the private sector, the continued application of the cash basis in the public sector appears to have thrown up a number of challenges relating to under-utilization of scarce resources, high degree of vulnerability to manipulation, lack of proper accountability and transparency, inadequate disclosure requirement due to the fact that the cash basis of accounting does not offer a realistic view of financial transaction. IPSAS adoption is expensive in all material respect, so expensive that some experts have contended that it’s much advertised benefits do not justify the cost of the implementation predominantly accounting or financial reporting places emphasis on accountability and transparency. Revolution is not only accorded to government functional activities, instead revolution also exists in Government Accounting. Thus, it is not quite established whether the adoption and subsequent proper implementation of IPSAS would have appreciable positive or negative impacts on the Nigerian economy. Therefore, this study seeks to evaluate the impact of adoption of IPSAS on the accountability of public funds in Nigeria.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine the adoption of adoption of international public sector accounting standards (IPSAs) on the accountability of federal government MDAs. Other general objectives of the study are:

1. To examine the extent to which International public sector accounting standards adoption leads to efficient management of public fund by the public entities in Nigeria.

2. To examine the extent to which International public sector accounting standards adoption by the public sector enhances effective budget implementation in Nigeria.

3. To examine the effect of International public sector accounting standards adoption on the accountability of public funds in Nigeria.

4. To examine the extent the adoption of International public sector Accounting Standards checks cases of corruption among public officers in Nigeria.

5. To examine the relationship between the adoption of International public sector accounting standards and accountability of public funds.

6. To suggest ways for improving on the accountability of general purpose financial reporting by the public sector.

1.4 RESEARCH QUESTIONS

1. What is the extent to which International public sector accounting standards adoption leads to efficient management of public fund by the public entities in Nigeria?

2. What is the extent to which International public sector accounting standards adoption by the public sector enhances effective budget implementation in Nigeria?

3. What is the effect of International public sector accounting standards adoption on the accountability of public funds in Nigeria?

4. To what extent is the adoption of International public sector Accounting Standards checking cases of corruption among public officers in Nigeria?

5. What is the relationship between the adoption of International public sector accounting standards and accountability of public funds?

6. What are the ways for improving on the accountability of general purpose financial reporting by the public sector?

1.5 RESEARCH HYPOTHESIS

Hypothesis 1

H0:  There is no significant impact of adoption of IPSAs on accountability of federal government MDAs.

H1: There is a significant impact of adoption of IPSAs on accountability of federal government MDAs.

Hypothesis 2

H0: There is no significant relationship between adoption of IPSAs and accountability of public funds

H1: There is a significant relationship between adoption of IPSAs and accountability of public funds.

1.6 SIGNIFICANCE OF THE STUDY

The findings of the study is expected to be of immense significance to the federal, state and Local governments in Nigeria will appreciate from the findings of the study the need to adopt and swing into full implementation of International Public Sector Accounting Standards as the economic implications of its adoption will be unveiled. The government will be fully aware of the gains of full disclosure requirements of IPSAS adoptions as it affects transparency, comparability, credibility, informative, and comprehensiveness of financial information. Again, Nigerian government ministries and beyond will be brought to terms, the realities of IPSAS adoption and the economic benefits. Preparers and users of public sector accounting information will also be encouraged on the need for full disclosure arising from IPSAS adoption as it influences accountability, transparency and credibility of accounting information. Again, the result will guide members of the public on the likely gains or otherwise arising from the adoption of International Public Sector Accounting Standards and their effects on financial reporting.

1.7    SCOPE OF THE STUDY 

The study is based on the adoption of adoption of international public sector accounting standards (IPSAs) on the accountability of federal government MDAs, Abuja.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Accountability: The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner. It also includes the responsibility for money or other entrusted property.

Funds: All the financial resources of a firm, such as cash in hand, bank balance, accounts receivable. Any change in these resources is reflected in the firm’s financial position.

Public: Relating to or involving people in general, rather than being limited to a particular group of people.

IPSAS:   i.e. international public sector accounting standard is a new revolution in government Accounting. IPSAS are international Accounting Standard used as guidelines for preparation of public sector financial Statements.

TAX ADMINISTRATION IN NIGERIA: CHALLENGES AND PROSPECTS (A CASE STUDY OF LAGOS STATE BOARD OF INTERNAL REVENUE)

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY

There have been calls from several quarters on the need to restructure the nation’s tax system. Nigeria is a monolithic economy with strong dependence on the oil sector; this dependence makes the economy to be vulnerable to external manipulation and adversely affects the planning horizons in the country. The recent global crisis in the world has brought to the fore the need to note that this overdependence on oil creates unnecessary shocks and thus, the need for diversification of the nation‟s resource base and long term growth path. The oil is an exhaustible resource, while taxation is the only non-exhaustible veritable source of resource generation to the government (Oloyede, 2010). Governments impose many types of taxes in most developed countries, individuals pay income taxes when they earn money, consumption taxes when they spend it, property taxes when they own a home or land, and in some cases estate taxes when they die. In the United States, federal, state, and local governments all collect taxes. Taxes on people’s income play critical roles in the revenue systems of all developed countries. From the foregoing, non-oil revenue especially tax has been the mainstay of most developed countries, in contrast to developing countries that still depend on primary products. Also, indirect taxes appear to be in vogue in developed countries, due to higher return, lower administration cost and higher compliance rate, however, most developing countries still rely on direct taxes with lower compliance rate (Oloyele, 2010). The Nigerian tax system has undergone several reforms geared towards enhancing tax collection and administration with minimal enforcement cost. The recent reforms include: the introduction of TIN (Tax Payers Identification Number), which became effective since February, 2008. Automated Tax System (ATS) that facilitates tracking of tax positions and issues by individual tax payer, E-Payment System (EPS) which enhances smooth payment procedure and reduces the incidence of tax touts, Enforcement scheme (special purpose tax officers), all these have led to an improvement in the tax administration in the country. In the face of unabeting debt difficulties, coupled with domestic and external financial imbalances confronting them, it is not surprising that many developing nations have been forced to adopt stabilization and adjustment policies which demand better and more efficient methods of mobilizing domestic financial resources with a view to achieving financial stability and promoting economic growth. Taxation has rightly been identified as a major tool in the strengthening of domestic resource mobilization and consequently, the search for ways and means of expanding the tax base and also strengthening tax administration has been intensified. That taxation has been one of the most important weapon available to government for marshalling financial resources is undisputable (Atta-Mills, 2002: Teidi, 2003 and Oloyede, 2010). It is needless to emphasize that the existence of well defined tax laws alone cannot guarantee the success of tax collection effort. There must always exist an efficient and effective tax administration as a sine qua non to successful domestic resource mobilization. According to Surrey (cited in Atta-Mills, 2002:1), it is increasingly apparent, however, that tax administration must receive far greater attention if the goals of tax policy are to be attained. Much of tax policy is being directed to obtaining increased revenues to enable governments to carry out their economic planning. Yet it is true in Nigeria that successful administration of some of the existing taxes would provide a considerable part of the needed additional revenue.

1.2 STATEMENT OF THE PROBLEM

Tax administration in Lagos State has brought a colossal loss of government revenue arising from tax evasion and tax avoidance both of which are symptoms of inadequacies in tax planning and administration. The situation is so bad now that it would not appear an exaggeration to say that not less than three quarters of potential tax revenue is lost annually. There are some administrative problems, which hamper the planning of feasible strategies for improving tax administration in Lagos State to boost the much-desired revenue drive in the State. The following are some of them: Poor quality staffs, Inadequate staffing with attendant ineffective staff rationalization, Tax evasion and avoidance, Bureaucratic bottleneck, Ineptitude on the part of other arms of government, e.g. failure to demand   income tax clearance certificate before granting government patronage, Inadequate training of staff with a resultant lack of knowledge of over changing taxes laws, Wrong sitting of revenue offices, Inadequate office accommodation and associated requirements, Inadequate staff welfare scheme, Poor communication, Lack of reasonable internal checks, Lack of information, Extravagant and unreasonable government expenditure pattern, Irresponsible and envy-provoking life style of people in government, Inadequate public enlightenment insufficient statistics on population and professions.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine tax administration in Nigeria: challenges and prospects. Other general objectives of the study are:

1. To examine the nature of tax administration in Nigeria.

2. To examine the challenges that is facing the tax administration in Nigeria.

3. To examine the effectiveness of the assessment, collection and remittance of tax system in Lagos State.

4. To examine future prospect of Lagos State tax administration, in the light of better administration for revenue generation.

5. To proffer suitable solutions to the problems facing the tax administration system in Lagos State.

1.4 RESEARCH QUESTIONS       

1. How is the nature of tax administration in Nigeria?

2. What are the challenges that are facing the tax administration in Nigeria?

3. How is the effectiveness of the assessment, collection and remittance of tax system in Lagos State?

4. What are future prospect of Lagos State tax administration, in the light of better administration for revenue generation?

5. What are the possible suitable solutions to the problems facing the tax administration system in Lagos State?

1.5 RESEARCH HYPOTHESIS

H0: There is no effectiveness of the assessment, collection and remittance of tax system in Lagos State

H1: There is effectiveness of the assessment, collection and remittance of tax system in Lagos State.

1.6 SIGNIFICANCE OF THE STUDY

The need for this study bears from the currents troubling tax administration in Lagos State in particular and in Nigeria, in general. Therefore, this study seeks to find solution to the problems identifiable through historical and empirical approaches. The discoveries and suggested solutions by this research work will be useful to the government and the taxpayers. Specifically, the Board of Internal Revenue and Inland Revenue found this project useful. It serves as light unto their path to see structural problems associated with tax administration and would, however, make it instructive for them to make amend. It is, however, pertinent to state that the Lagos State Board of Internal Revenue is the researcher’s main point. The members of the public already polluted with psychological depression regarding tax matters would, no doubt, found this study very important because it addressed this disorder. When they were aware of the importance of proper tax system and tax payment and the demerits of avoiding and evading tax – which, undoubtedly, are quite untoward to good tax administration. Finally, it would serve as a reference material for future research. It would identify the critical challenges such as corruption and fraud that are confronting the tax system so that appropriate measure could be taken to tackle the menace. It would serve as a powerful fiscal weapon to plan and direct the economy by shaping the economy growth and development of a state. It would serve as national debt and to provide retirement benefits.

1.7    SCOPE OF THE STUDY 

The study is based on tax administration in Nigeria: challenges and prospects, a case study of Lagos state Board of internal revenue.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Tax: is a percentage of persons’ income or of the price of goods takes by the government to help pay the benefit received.

Direct Tax: Tax levied directly on the income of individual and business entities. They can be proportion regressive or progressive.

Indirect Tax: these are taxes charge with price of goods bought at a particular time. These are taxes that are levied in goods and services.

Tax Policy: Is a particular course adopted in this case line of action adopted by the government in respect of taxation. (James S and Nobles.C.1978)

Assessment Year: Means the year in which the profit of a business are assessed to tax (Okoruen U.U.1992).

Total Income Tax: The aggregate assessable income for the relevant year after additional and allowance deduction has been made.

Proportional Tax: all tax payers pay the same percentage of their income and relative difference between the differences incomes remain approximately the same.

ROLE OF COMMERCIAL BANKS IN FINANCING SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA: CASE STUDY OF LAGOS STATE

CHAPTER ONE

INTRODUCTION

  1. BACKGROUND OF THE STUDY

Small and Medium Enterprises (SMEs) have been recognised as a driving force for economic growth in any nation. They are also perceived as the key to Nigeria’s economic growth, poverty alleviation, increase productivity level in a nation, and employment generation in recent years has generated a lot of research interest on their challenges and prospect. In recognition of the role of Small and Medium Scale Enterprises in the economic growth process of Nigeria, government has taken concerted efforts to foster the growth of Small and Medium Scale Enterprises and also develop entrepreneurship. Small and Medium Scale Enterprises are of necessity to a nation’s industrialization process. One foremost way of promoting Small and Medium Scale Enterprises is by having easy access to finance. Finance is of high importance to the growth of Small and Medium Scale Enterprises. Afolabi (2013) noted that a major gap in Nigeria’s industrial development process in the past years has been the absence of a strong and virile SMEs sector attributable to the reluctance of banks especially commercial banks to lend to the sector. Commercial banks through their intermediation role are meant to provide financial succour to SMEs. Prior researchers have identified lack of finance as a threat to the performance of SMEs. For SMEs to perform their role in the economy, they need adequate funds in terms of short and long-term loans (Ohachosim, Onwuchekwa&Ifeanyi, 2013). Adequate financing of Small and Medium Scale Enterprises is paramount to their survival, financial constraint is one of the main reasons Small and Medium Scale Enterprises fail in Nigeria. Osoba (1987) argued that financing strength is the main determinant of small and medium enterprises growth in developing countries. There is no gain saying that finance would boost the performance of Small and Medium Scale Enterprises if adequate and optimally utilized. The dearth of funds in these businesses is capable of crippling their operations. Lack of funding for SMEs creates obstacles in allowing them contribute to economic growth and development. Onugu (2005) ranked access to finance as the second problem faced by Small and Medium Scale Enterprises in Nigeria. Commercial banks are often reluctant to lend to Small and Medium Scale Enterprises because of the perceived risky nature of Small and Medium Scale Enterprises by them. Analysis of the annual trend in the share of commercial bank credit to small-scale industries indicates a decline from about 7.5 per cent in 2003 to less than 1% in 2006 and a further decline in 2012 to 0.14 per cent (Sanusi, 2013). The decline shows that commercial banks have less preference to lend to Small and Medium Scale Enterprises. The main identified gap that necessitated this study is the perceived the role of commercial banks in financing Small and Medium Scale Enterprises in Nigeria.

  1. STATEMENT OF THE PROBLEM

There are numerous problems that hinder the growth of small and medium scale enterprises in developing countries. Lack of access to credit hinders the growth and development of SMEs. Also is the problem of cutthroat competition of the established industries and the small and medium scale enterprises also are a critical problem. Most times commercial banks do not follow the credit guidelines and other related policy issues affecting the small-scale enterprises in Nigeria. In some instances where commercial banks obey policy guidelines, they charge very high interest rate. The problem of credit to small scale industries may not necessarily be as a result of financing insufficiency but rather for some other reasons among which are.

  1. Insufficient preparation on the part of small scale entrepreneurs in their request for credit assistance.
  2. Information gaps as to range of funding institutions and scope of services available in these institutions
  3. Moreover, servicing of small business accounts is relatively experience, risky and difficult to monitor with low turnover of account.

However, the parishioners in the sector small scale industry do not display competence in preparing justification for their project.  Most of them do come up with cash flow projections, projected balance sheets, among others.  They are based on personal rudimentary in formation and speculation.  At times when they seek the advice of consultants, the outcome that are made figures project based on assumptions which are most of the time unrealistic. As a result such proposals are out rightly rejected by banks when credit demands in this sector are not in compliance in this government monetary policy and credit guidelines which must be adhered to by banks.

1.3 RESEARCH QUESTION

  1. What are the roles of commercial banks in financing small scale Enterprises in Nigeria?
  2. What are the impact of commercial Banks on small and Medium Scale enterprises in Nigeria?
  3. What are the effects of financing on the performance of SMEs?
  4. What are the problems encountered by SMEs in obtaining finance from commercial banks?
  5. What is the relationship between the performance of SMEs and economic development?
  6. What are the possible ways in which commercial banks can help in the success and advancement of small and medium scale enterprises?

1.4 AIMS OF THE STUDY

The major purpose of this study is to examine sport diplomacy and regional integration. Other general objectives of the study are:

  1. To examine the role of commercial banks in financing small scale Enterprises in Nigeria.
  2. To examine the impact of commercial Banks on small and Medium Scale enterprises in Nigeria.
  3. To examine the effect of financing on the performance of SMEs.
  4. To examine the problems encountered by SMEs in obtaining finance from commercial banks.
  5. To examine the relationship between the performance of SMEs and economic development.
  6. To suggest possible ways in which commercial banks can help for the success and advancement of small and medium scale enterprises.

1.5 RESEARCH HYPOTHESIS

Hypothesis 1

H0: There is no significant role of commercial banks in financing SMEs in Nigeria.

H1: There is a significant role of commercial banks in financing SMEs in Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

This study will highlight problems associated with the role of commercial banks in financing small scale industry in Nigeria. It will give information on the possible areas for improvement. Furthermore, the study will help commercial banks to assess their role in financing small scale industry in Nigeria. Moreover, suggestions and recommendations made in this paper will help policy makers formulate new economic policies to maintain or modify the existing one. It will equally serve as a guideline to researchers who may wish to research this study in the future. It will also help small scale entrepreneurs to make sufficient preparation in their request for credit assistance. It will guide the entrepreneurs in making credits demands that are in compliance with government monetary policy. The last but not the least it will help the entrepreneurs to display competency in preparing justification for their project. It is rear to see most of them coming up with cash projections, projected balance sheets.

1.7    SCOPE OF THE STUDY 

The study is based on role of commercial Banks in Financing SMEs in Nigeria, case study of Lagos State.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Small Scale Enterprise: An enterprise with a labor size of 11-1000 workers or a total cost of not more than 50 million including working capital but excluding cost of land (Sule, 1986:207).

Medium Scale Enterprise: An industry with a labor size of between 10-300 workers or a total cost of over 50 million but not more than 200 million including working capital but excluding cost of land (Clifford, 1972:85).

Commercial Bank: A financial institution that acquires deposit from savings, surplus unit and give out loans to savings deficit units.

Sole Proprietorship: Is a business owned and conducted by one person presumably assisted by one or more persons for intakes wife and children.

Enterprises: It means any establishment engaged in production, repairs or services to satisfy human wants and make room for profits.

IMPLICATION OF A COMMON CURRENCY FOR WEST AFRICAN SUB-REGION (ECOWAS)

CHAPTER ONE

INTRODUCTION

  1. BACKGROUND OF THE STUDY

The adoption of a common monetary policy is part of the process of economic integration. It has to do with member countries giving up their independent monetary policies to have a common central bank responsible for the conduct of monetary policy for the member states. The direct economic cost from transforming to a monetary union is the senior age lost from printing money. The gain in terms of low inflation and increased trade and growth is often a core reason for joining a monetary union in spite of the loss of senior age associated with it. Thus, the preference for a monetary union over independent individual monetary policies hinges on the expected benefits of the integration, which include reduction in transaction costs of cross border trade (including exchange cost), increased market size and trade. These factors are growth enhancing in nature. In connection to this, there has been growing interest in efforts at fostering economic integration at various regional levels, including countries in the Economic Community of West African States (ECOWAS). According to the theory of Optimum Currency Area (OCA), Preferential Trade Agreement (PTA), Free Trade Area (FTA), Customs Union (CU) and Common Market are the initial stages of economic integration, with unification of monetary policy (that is, establishing a single currency) being the next stage. The nature of African continent makes the region to deserve the need for regional economic integration more than other developing countries in the world (Iyoha 2004). Their specific characteristics include poor intra-regional trade, diverse trade and macro policy regimes and infrastructure inadequacy. This general feature is specific to the ECOWAS countries as well.

The actual study for establishment of a common currency for west African state (ECOWAS) and drafting of a programme of monetary and fiscal policies of members states was between 1985 and 1986 period (Arah, 2001). In response to the study, the sub-region monetary co-operation programme involving short and long term measures were seen to be economic flight (Ogwuma 1998). The highest level of economic integration is the monetary union, which involves the integration of trade and micro-economic policies and establishment of a common central bank and a single currency.

The establishment of a monetary union is however consequent on the member states, meeting the convertibility condition of monetary and fiscal prudence and other macro – economic convergence indicators which are the short and long measures term. The short term measures were settlement of areas in the West Africa monetary agency (WAMA), clearing system establishment of a credit guarantee fund, introduction of new payment instrument like ECOWAS traveller’s cheques and extension of the range of products eligible for transactions through the clearing system. According to Ezema (2001) the long term measures include liberation of trade and payment system in all member countries, liberation of all interest and exchange rate, reduction of inflation to a single digit and creation of a single currency zone within the sub-region by the year 2000 (the deadline for achieving the measure by all member countries was set for 1988). However, most member states beat the deadline while the traveller cheques issues was delay due to political and economic muscle flexing between the Unions Economiuqe Manetaire Quest Africa (UEMQA) members and the rest. The traveller cheques afforded one of the most realistic steps towards achieving economic integration and a single momentary zone, but had to suffer several postponements due to various reasons. The initial disagreement among member states was on the modalities for finding the cheques out of the ‘ghost” or imagined position to the members in the scheme of things. In the words of Olajide (2001) at another attempt in 1998, some CFFA zone members did not attend the summit on the ground that the delegates wanted to conclude some contracts with their home governments. This was done without notice even as it suffered postponement for another meeting with France before that of the travellers cheques launch.

            In February 1998, at the planned launching in Abuja, all disagreement were resolved under the auspices of an adequate-hoc committee set up by the ECOWAS heads of states composing Cote D’ voice, Ghana, Mali, Togo and Nigeria. Univocally, the CFA zone members were in vanguard of the launching of the travellers cheques in 1999. Ostensibly due to the successful establishment of Euro (the European common currency which will take over the national currencies in Europe in 2004), and therefore effectively terminate the French Support for CFA. On December 15, 2000, heads of state and governments of ECOWAS in Bamako, Mali approved the decision to establish a common currency by 2003. The decision was the result of the initiative take by Ghana and Nigeria in a bilateral economic meeting on December 1999 to adopt a two – track system called FAST TRACK APPROACH (FTA) to the implementation of ECOWAS integration programmes for West African in 2004. The fast track approach recognize the need to have a parallel zone christened West Africa monetary Zone (WAMZ) the UEMOA to work for a gradual merger of the two at appointed period in line with the deadline.

  1. STATEMENT OF THE PROBLEM

In spite of the numerous efforts made by the ECOWAS member states to establish a common currency in West Africa which will help to foster economic integration international the sub – region by implementing ECOWAS monetary measures, the issue of common currency is still a mirage because of the following reasons;

  1. The strength of the economics of these West African countries varies, so there is no common relationship between their monies.
  2. Divergent tariff structure among member countries.
  3. Low level of intra-regional trade in the sub region since less than 5 percent of the total international trade of the sub region is channelled.
  4. The political instability in some of the countries of the sub region.
  5. Inability of the proper member states to meet up with the demand of the monetary zone.                                    

1.3 AIMS/OBJECTIVES OF THE STUDY

The main purpose of this project is on the implication of a common currency for West African Sub-region. Other purposes of the study included.  

  1. To trace the extent to which the ECOWAS member states are committed in establishing a common currency for West Africa.
  2. To find out if the establishment of a West Africa common currency will enhance the economic growth and development in the sub – region.
  3. To examine some policy measures introduced to boost the adoption of the West Africa common currency.
  4. To find out the problem militating against the immediate establishment of the West African common currency and ways of curbing the problem.
  5. To proffer solutions, and make recommendations based on the findings.
    1. RESEARCH QUESTIONS

1. To what extent has the ECOWAS states gone in establishing a common currency for West Africa.

  • Will the establishment of a West Africa common currency enhance economic growth and development in the sub-region?
  • What policy measures have been introduced to boost the adoption of West African common currency?
  • What are the problems militating against the establishment of West African common currency and ways of nipping these problems on board?

1.5 HYPOTHESIS

H0: The establishment of West Africa common currency will not enhance the economic growth and development in the region

H1: The establishment of West Africa common currency will enhance the economic growth and development in the region.

1.6 SIGNIFICANCE OF THE STUDY

It is hoped that the finding and recommendations of this project will.

i)  Be a partial fulfilment of the requirement of the award of Higher National Diploma in accountancy.

ii) Enable ECOWAS member states to know the problem delaying the establishment of common currency for West Africa.

iii) Be a great help to future researchers who will want to share ideas.

iv) Encourages ECOWAS members to show more interest towards the adoption of a West Africa Common currency.

1.7 SCOPE OF THE STUDY

The area coverage research of this project is Enugu. The research is to determine the implication of common currency for West Africa sub – region.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (net, questionnaire and view).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.9 DEFINITION OF TERMS

Common Currency: The common currency of the EU member states is a significant change in the economic, political and social life of all of them. It is important that the countries get ready for this change and their citizens understand its importance. In order that they recognised the advantages ensuing from implementing the single-currency, but on other hand equally recognised the challenges presented by this process and realised also the possible partial disadvantages.

IMPACT OF VALUE ADDED TAX ON THE PERFORMANCE OF CORPORATE ORGANIZATIONS IN EBONYI STATE (A STUDY OF A CORPORATE ORGANIZATION IN THE STATE)

CHAPTER ONE

INTRODUCTION

  1. BACKGROUND OF THE STUDY

In the last half-century, the Value Added Tax (VAT) has been widely implemented in many parts of the world. This popularity can be explained by the key features of the tax: neutrality and transparency. Tax neutrality is ensured by the mechanism of deduction of input tax through the supply chain, as far as the end consumer. This important feature helps producers to avoid the pressure for preferential nature of the product, number of transactions and structure of the distribution chain. With regards to international trade, VAT demonstrates neutral treatment of export, as VAT taxes exports at a zero rate, or is exempt from VAT with an allowance for input tax deduction. VAT does not affect the competitiveness of domestic firms to export, and is well suited to the demands of a globalizing economy. The transparent nature of VAT provides a simple method of calculation and payment for consumers. It is calculated for them at the point of sale and they make the payment as a part of the purchase price. Perceived as transaction-based, VAT has a high revenue-raising capacity and provides a large revenue source in almost all countries-members of the Organization for Economic Cooperation and Development (OECD), including Norway. Considering all forms of taxation, OECD Revenue Statistics (2016b) ranks Norway 9th out of 35 OECD countries with 38,1% in terms of the tax-to-GDP ratio in 2015. Tax policy reform is an area that has been widely revisited by academicians in recent times as there is an increasing need to curtail overdependence on foreign sources of funding government expenditure. This area of reform has been tackled differently by different researchers over the years. Whereas Joshi and Ayee (2009) focused their attention on tracing the history of various tax reforms instituted in less developed countries, Muriithi and Moyi (2014) emphasized the need for governments to effectively evaluate and choose between competing domestic funding sources for government budgets. In a similar vein, Tyran and Sausgruber (2013) called on policy makers to replace corporate income tax (CIT) with value added tax (VAT) as firms are unable to transfer the cash flow burden associated with CIT to the final consumer. These calls are based on the notion that firms require cash to carry on business. Indeed, Manisha (2012) asserted that cash is the lifeblood of every successful business organization. Even though emphasis on most tax policy reforms in less developed countries is shifting toward VAT implementation due to its purported ability to transfer the associated tax burden to the final consumer, little effort is exerted to discover the cash flow effect across various industries. Epstein and Jermakowicz (2010) described cash flows as “inflows and outflows of cash and cash equivalents”. A number of factors influence the cash flows of firms. Scherr (1989) argued that organizational cash balance is significantly influenced by its cash conversion cycle consisting of its inventories holding period, accounts receivables collection period, and accounts payables payment period. Prior studies relied on projected data to assess the impact of VAT on corporate cash flow (Murphy, 1991). In some instances, actual data was employed to ascertain the general cash flow effect of VAT on corporate bodies (Salia, 2016). Generally, a good tax system should improve government revenue without hampering private sector participation in infrastructure development (Ali-Nakyea, 2014). Private sector participation in infrastructure development is only possible if firms have cash to finance their activities. The purpose of this study is to ascertain the effect of VAT on the performance of corporate organizations in Nigeria.

  1. STATEMENT OF PROBLEM

VAT was introduced in Nigeria following a study group set up by the federal government in 1991 to review the nation’s tax system. It was this group that proposed VAT and in that same manner, a committee was set up to conduct feasibility study on the implementation of the VAT (Thacker, 2009). The attitude of Nigerians towards taxation is worrisome as many prefer not to pay tax if given the opportunity. The economy continues to lose huge amount of revenue through the unwholesome practice of tax avoidance and tax evasion, these loss of revenue can change the fortune of many economy particularly, developing countries like Nigeria. This problem has been lingering for so long which urgent attention and solution is overdue. The cost of collecting tax in Nigeria (both social and economic cost) is too high to the extent that, if left unchecked, the cost may soon outweigh the benefit or value derived from such operation and that will not be appropriate for the system. The rate of corruption on the part of tax officials is alarming as most of them connive and collude with supposed-tax- payer to evade and avoid tax. Sometimes, the tax officials are not properly trained on the modern ways of tax administration and most of the corporate organizations will fall if not properly checked. This study therefore attempts to address the issues of impact of Value Added Tax (VAT) on the performance of corporate organizations in Nigeria.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine the impact of value added tax on the performance of corporate organizations. Other general objectives of the study are:

1. To examine the nature of value added tax in Nigeria.

2. To examine the implications of cash flow of VAT remittance on corporate organizations.

3. To examine the impact of Value Added Tax on the performance of corporate organizations.

4. To examine ways of tax administration to corporate organizations.

5. To examine the relationship between Value Added Tax and the performance of corporate organizations.

6. To identify the major factors influencing an effective VAT administration in Nigeria.

1.4 RESEARCH QUESTIONS

1. How is the nature of value added tax in Nigeria?

2. What are the implications of cash flow of VAT remittance on corporate organizations?

3. What are the impacts of Value Added Tax on the performance of corporate organizations?

4. What are the ways of administrating tax to corporate organizations?

5. What are the relationship between Value Added Tax and the performance of corporate organizations?

6. What are the major factors influencing an effective VAT administration in Nigeria?

1.5 RESEARCH HYPOTHESES

H01: There is no impact of Value Added Tax on the performance of corporate organization.

H02: There is no significant relationship between Value Added Tax and the performance of corporate organizations.

1.6 SIGNIFICANCE OF THE STUDY

The study will assist the government in policy formulation as it relates to Value Added Tax and monetary policies. It will help to strengthen the operation of the relevant government agencies such as Federal Board of Inland revenue, Central Bank of Nigeria, Joint tax Board and others. This study will bring government attention to other sources of revenue apart from overdependence on revenue from petroleum. The study will be restricted to the aspect of Value Added Tax that falls under the jurisdiction of the Federal Board of Inland Revenue (FBIR), Federal Inland revenue Service (FIRS). Knowledge of the cash flow implications of VAT remittance on firms in different industries should enhance government decisions on the application of VAT rate to various industries without having adverse effects on corporate cash flow in various industries. It is also expected to aid corporate managers to determine which sectors to invest their scarce productive resources without being heavily hit by cash flow challenges resulting from VAT imposition.

1.7    SCOPE OF THE STUDY 

The study is based on impact of value added tax on the performance of corporate organizations in Ebonyi state: A study of a corporate organization in the state.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Tax: This is the money which government has legislated that adults should pay for the development of the country.

Tax compliance:  Refers to fulfilling all tax obligations as specified by the law freely and completely. Tax compliance means submitting a tax return within the stipulated period, correctly stating income and deductions, paying assessed taxes by due date and paying levied taxes.

IMPACT OF SOUND FINANCIAL STATEMENT PREPARATION ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES: CASE STUDY OF KATAGUM L.G.A, BAUCHI STATE

CHAPTER ONE

INTRODUCTION

  1. BACKGROUND OF THE STUDY

Globally, Small and Medium-Scale Enterprises (SMEs) play crucial roles in the support of both developed and developing economies. About 75% of the work forces in Europe are employed by SMEs (Rathnasiri, 2014). The dynamic role of SMEs in developing countries cannot be overemphasized. These enterprises have been recognized as the conduit through which rapid industrialization and other developmental goals of these countries can be achieved. United Nations Commission on Trade and Development (UNCTD) (2004) stated that SMEs were sustaining up to 60% of emerging economies growth output. The SME sector also employed a projected 22% of the adult population in developing countries. The sector employs about 15.5% of the labour force in Nigeria (Kayanula & Quartey, 2013), and has witnessed higher employment growth than micro and large scale enterprises (5% in Nigeria). Although, SMEs form a substantial part of the economy, unfortunately their contribution to the economy is yet to be fully realized due to a myriad of problems. This is evidence by the large number of SMEs spread throughout the country but, with very little to show in terms of sustained growth and diversity in Nigeria’s industrial output. Moreover, most SMEs work on small margins of cash flow, such that when they are faced with financial difficulties, they have neither the necessary resources nor the borrowing power like the bigger companies to sustain their operations (Kayanula & Quartey, 2013). This problem generally occurs in SMEs due to lack of financial management practices like financial statements for decision to be taken. Cash outflows seem to outweigh cash inflows, access to credit facilities and loans are limited. The result is normally the SMEs operative on losses except the profits they assume which eventually collapse the business. The expansion response of this sector has been restricted by unnumbered issues comprising the unavailability of comprehensive financial statements. The development of the thought of incomplete records emerged from the background that majority of SMEs do not keep correct accounting records. To most of them a simple cashbook to record receipts and payments could be enough. As the business grows and the need for finance acquisition is envisioned, a realization is reached that the need for additional accounting information is required to facilitate the growth and sustainability of these enterprises. The problem of incomplete records, when it comes to preparing period-end financial statements, is that they do not show the actual performance of the business, as to whether it is progressing or retrogressing. As a prerequisite to profitability, sound business practices must be adopted to ensure the business ability to survive in the rapidly changing environment. Small business owners have failed to recognize the importance of putting in place a well-structured system as a means of helping them to provide accurate financial statement through which credit facilities could be obtained from banks and increasing their capital base. Adequate and proper records therefore are important feature of any business unit, as it helps in preparing up to day financial statements that are used in prudent business decision making. Dawuda and Azeko (2015) observed that poor record keeping or non-availability of financial records lead to mismanagement of resources and poor cash management and this do have negative effect on the growth of SMEs leading to the collapse of some of them. According to Van Aardt et al. (2008) and Rankhumise (2010) poor records keeping makes it difficult to differentiate between business transactions and personal transactions. It is the responsibility of business owners and managers to avoid using assets of the business for personal use at the expense of the business. A primary purpose of preparing financial statement is to make available accurate information to owners and managers of SMEs for use in measuring financial performance. Thus, the significance of financial performance measurement to any business, big or small, is very imperative (Amoako et al, 2014). Haryani (2012) postulates that as profit maximization is most often the main concern of business entities, the accounting bases, concepts and principles adopted have to capture and report all the relevant accounting information to ensure consistency in its measurement. Owing to dire consequence that improper accounting practices can have on SMEs producing incomplete financial statements, it is imperative that the accounting practices of SMEs supply holistic and pertinent financial information needed to improve economic decisions made by entrepreneurs (Amidu and Abor, 2005). Information gathered revealed that majority of SMEs prepare financial statements annually yet most of them have difficulty in accessing finance from financial institutions and also difficulty measuring their financial performance based of the accounting records kept due to inadequacy of the accounting records to help prepare sound financial statements representing the true state of financial standing of the enterprises.

1.2 STATEMENT OF PROBLEM

In a modern business environment, which is becoming more competitive, the survival of firms, be it small or large; depends upon the strategic decisions made by management. This is however done with the help of financial statements analysis, which is a big challenge to most countries having shortage of professional accountants and financial analysts as it is the case to our country. Every manager needs information in order to make the right decision at the right time. In a business organization, the financial data are obtained from the financial statements. Financial analyst must analyze the data in financial statements to provide the meaningful information for use. Without correct information, the decisions made by decision makers may affect the growth of the organization. In this view, a sustained success will depend on how good decisions are made based on the proper analysis of financial statements. The relationship between analysis of financial statements and organization performance is twisted together, the management of an organization is depending on accounting information for taking various strategic decisions and financial statements provide such information. This information is made useful by analyzing and interpretation of financial statements with help of financial analysis techniques. Sharma & Shashi 2001, financial statements are prepared primarily for decision making, but the information provided in financial statements is not an end in itself and no meaningful conclusion can be drawn from these statements alone. The financial analysis helps in making decisions from the information provided in these financial statements. Thus, the proper financial statements analysis assists management in communicating information which is pertinent and purposeful for assessing the performance and effectiveness of the organization. This study is set to investigate the use of financial statement analysis on in assessing the performance of the organization.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine the critical analysis of the use of financial statement in assessing the performance of an organization. Other general objectives of the study are:

1. To determine the extent to which sound financial statement preparation is carried out among these businesses.

2. To examine the nature of financial statements of an organization.

3. To examine the impacts of sound financial statements preparation on the performance of Small and Medium Enterprises (SMEs).

4. To examine the challenges facing Small and Medium Enterprises (SMEs) in adopting effective financial accounting reporting in Nigeria.

5. To examine the relationship between financial statements and organization performance.

6. To ascertain the contribution of poor credit facilities to inadequate accounting records in SMEs in Nigeria.

1.4 RESEARCH QUESTIONS

1. To what extent is sound financial statement preparation being carried out among these businesses?

2. What is the nature of financial statements of an organization?

3. What are the impacts of sound financial statements preparation on the performance of Small and Medium Enterprises (SMEs)?

4. What are those challenges facing Small and Medium Enterprises (SMEs) in adopting effective financial accounting reporting in Nigeria?

5. What is the relationship between financial statements and organization performance?

6. To what extent do poor credit facilities contributes to inadequate accounting records in SMEs in Nigeria?

1.5 RESEARCH HYPOTHESES

H01: soundfinancial statement preparation has no significant impact on the performance of small and medium scale enterprises in Nigeria.

H02: Sound financial statement preparation has no significant relationship with the performance of small scale and medium scale enterprises in Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

The researcher hope that this analytical research will play its part in giving attention to the financial performance of an organization, to the organization management as well as users of the financial statements. Also it will be useful for the management on setting of and selection of appropriate financing and operating strategies to be competent in any organization. In addition to that, it helps the researchers to employ their theoretical knowledge in to practice. Besides, the study and frame work designed to evaluate the financial performance of organizations will be expected to serve as an input for future researchers interested in assessing the performance of an organization using financial statements.

1.7    SCOPE OF THE STUDY 

The study is based on the impact of sound financial statement preparation on the performance of small and medium scale enterprises, case study of Katagum L.G.A, Bauchi state.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Analysis: A systematic examination and evaluation of data or information, by breaking it into its component parts to uncover their inter-relationships or opposite of synthesis. An examination of data and facts to uncover, understand the cause, effect and relationships, thus providing basis for problem solving and decision making.

Financial Statement: Is a summary report that shows how a firm has used the funds entrusted to it by its stockholders (shareholders) and lenders, and what is it current financial position. The three basic financial statements are the (1) balance sheet, which shows firm’s assets, liabilities, and net worth on a stated date; (2) income statement (also called profit & loss account), which shows how the net income of the firm is arrived at over a stated period, and (3) cash flow statement, which shows the inflows and outflows of cash caused by the firm’s activities during a stated period.

Assessing: Is the action or an instance of making a judgment about something: the act of assessing something.

Performance: The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed. In a contract, performance is deemed to be the fulfilment of an obligation, in a manner that releases the performer from all liabilities under the contract.

IMPACT OF CORPORATE GOVERNANCE ON PUBLIC CONFIDENCE IN FINANCIAL REPORTING (A CASE STUDY OF UNILEVER PLC, LAGOS STATE)

CHAPTER ONE

INTRODUCTION

  1. BACKGROUND OF THE STUDY

The preparation of stewardship report from the accounting point of view is the role of management, who oversees the affairs of the business organization on behalf of the owners usually the shareholders. This stewardship report represents the financial statements covering the operating performance and the financial position of a company. It is usually prepared by the directors and addressed to the shareholders as a fulfilment of their agency responsibility. Suffice to say that if all the facts concerning financial transactions were properly and accurately recorded, and if the owners and managers of business enterprises were entirely honest and sufficiently skilled in matters of accounting and recording, there would be little need for independent auditing. However, human nature being as it is, there probably will always be a need for the auditor to ensure the provision of dependable financial information which is essential to the very existence of our society and the business world. The goal of the providers of accounting information runs directly counter to those of the users of the information. Implicit in this line of reasoning is the recognition of the social need for independent auditors, individuals with a professional competence and integrity who can tell whether the information on which investors can rely constitutes a fair picture of what is really going on in an enterprise. Good accounting and financial reporting is the basis for society to allocate its resources in the most efficient manner. The contribution of the independent auditor is to give credibility to financial statements for this singular fact (Oyadonghan and Ibanichuka 2014). Credibility in this usage means that the financial statements can be believed; that is, they can be relied upon by outsiders, such as trade creditors, bankers, stock holders, government and other interested third parties. Therefore Credibility is “The quality of being generally accepted and trusted” (Oxford Advanced Learner’s Dictionary of English). Audited financial statements are now the accepted means by which business corporations report their operating results and financial position. The word audit when applied to financial statements means that the statements of financial position, income and changes in equities /retained earnings are examined with an audit report prepared by independent public accountant, expressing a professional opinion as to the fairness of the company’s financial statements. On the other hand, Confidence is the feeling that you can trust, believe in and be sure about the abilities or good qualities of something or somebody. Audit competence can only be achieved if public confidence on audit reports can be improved significantly. Both credibility and confidence goes hand in hand and each variable impacts on each other to achieve the audit quality and competence the users of financial statement desires. However, management failure arising from co-operate governance failure over the years had contributed to the loss of credibility in audit reports. The solution to this problem of credibility in financial and audit reporting lies in appointing an independent person and public confidence in audit reports is enhanced when the profession encourages high standards of performance and conduct on the part of all practitioners‟. According to Olagunju (2011), for an audit to be credible and reliable, it must be performed by someone, who is independent and cannot be influenced by position, power which will affect its own conclusion. Auditor independence helps to ensure quality audit (Oyadonghan and Ibanichuka, 2014). The UK financial Reporting Council (UKFRC) has undertaken an extensive reform on audit quality and in February 2008 released the audit quality frame work to improve i.e. the confidence and credibility in audit. They are includes the culture within an audit firm, the skills and personal qualities of audit partners and staff, the effectiveness of the audit process; the reliability and usefulness of audit reporting; and factors outside the control of an auditor that affects the audit quality (Linberg and Beck,2011). The aim of this research work is to improve audit reliability and public confidence, by utilizing the significance of confidence and credibility as approaches to improving audit competence. One of the cumulative negative effects that window dressing (creative accounting) had was the collapse of some USA giant companies such as Enron; world-com, Global Crossing, Tyco, with a host of others in Nigeria (Linberg and Beck 2011). The outcome of the investigations on the collapse of these firms shows that they have being window dressing their accounts with false statements of financial positions for years. This has affected the confidence of the public on the favourable audit reports these companies had being having for the affected periods. Therefore it is good to determine what measures can contribute to improving public confidence in audit reports in Nigeria, and to establish some causes responsible for the lack of public confidence in audit report.

1.2 STATEMENT OF PROBLEM

Bushman et al., (2011) advanced that the information quality increases with the percentage of outside directors. Similarly, (Beekes et al, 2011) noticed that the board independence allows disclosing information of good quality by the firms in Nigeria. In other contexts, (Firth et al., 2007) indicated that the presence of independent directors improves the earnings quality of firms. In contrast, other studies suggested that the independent directors are not enough competent to control the managers and their presence in the board has no effect on the reporting quality. In addition to that, the corporate governance literature has emphasized the need to separate the positions of CEO (chief executive officer) and board chairman to guarantee the board independence and improve the firm transparency (Jensen, 1993). Byard et al., (2009) indicated that the presence of a CEO who serves also as the board chairman is associated with poor quality of financial information. Nevertheless, other authors did not detect a significant association between CEO duality and information quality in various contexts of studies (Ahmed et al., 2009; Petra 2007). (Beasley, 1996) argued that the probability of detecting financial statement fraud in the American firms decreases with the percentage of outside directors. (Peasnell et al., 2012) and (Klein, 2012) revealed that the independent board mitigates earnings management. Based on the above, this study is aiming to answer the following statement, which represents the study question: “Do Corporate Governance Practices have impact on public confidence in Financial Reporting Quality in Nigerian firms?Poor application of corporate governance, which is considered one of the most important pillars to enhance transparency , increase control and supervision on management and reduction fraud committed by some executives and companies Boards of Directors, which may cause damage to shareholders, investors, stakeholders, and company’s reputation as well as. The purpose of this study is to investigate the impact of corporate governance on public confidence in financial reporting.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine the impact of corporate governance on public confidence in financial reporting. Other general objectives of the study are:

  1. To examine the importance of financial reporting in corporate governance
  2. To measure the effectiveness of corporate governance Code in relation to minimization of earnings management
  3. To examine how the impact of corporate governance on public confidence in financial reporting.
  4. To examine whether corporate governance help in building public’s confidence in financial report.
  5. To examine the relationship between corporate governance and public confidence in financial reporting.
  6. To examine the problems of good corporate governance in a business firm.

1.4 RESEARCH QUESTIONS

  1. What is the importance of financial reporting in corporate governance?
  2. How is the effectiveness of corporate governance Code in relation to minimization of earnings management?
  3. What are the impacts of corporate governance on public confidence in financial reporting?
  4. Does corporate governance help in building public’s confidence in financial report?
  5. What is the relationship between corporate governance and public confidence in financial reporting?
  6. What are the problems of good corporate governance in a business firm?

1.5 RESEARCH HYPOTHESES

Hypothesis 1

H0: There is no impact of corporate governance on public confidence in financial reporting.

H1: There is a significant impact of corporate governance on public confidence in financial reporting.

Hypothesis 2

H0: There is no significant relationship between corporate governance and public confidence in financial reporting.

H1: There is a significant relationship between corporate governance and public confidence in financial reporting.

1.6 SIGNIFICANCE OF THE STUDY

The study importance stems of its attempt to highlight the importance of corporate governance and principles, in enhancing public confidence in financial reporting in business entities since these companies are deemed one of the most important sectors in of capitals attracting process that requires enhancing their position among other sectors in Nigerian market through proving their credibility and transparency to increase shareholders trust and other parties. Geographically, the study will cover the global view on issues of public confidence and credibility in audit and financial reporting. Cases of window dressing and collapse of corporate governance as it negatively impacted on audit credibility is also covered, both in the global and Nigerian perspective. The study would serve as reference materials to other researchers who may want to carry out more research on this or related topic. The study would broaden the researcher knowledge on the subject

1.7    SCOPE OF THE STUDY 

The study is based on the impact of corporate governance on public confidence in financial reporting, a case study of Unilever plc, Lagos state.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Corporate Governance: Is the system by which companies are directed and controlled. Boards of directors are responsible for the governance of their companies. The shareholders’ role in governance is to appoint the directors and the auditors and to satisfy themselves that an appropriate governance structure is in place.

Public Confidence: Trust bestowed by citizens based on demonstrations and expectations of: (1) Their government’s ability to provide for their common defence and economic security and behave consistent with the interests of society; (2) Their critical infrastructures’ ability to provide products and services at expected levels and to behave consistent with their customers’ best interests.

Financial Reporting: Financial reporting is the process of producing statements that disclose an organization’s financial status to management, investors and the government.