The Role of a Chartered Accountant in the Formation Acquisition and Liquidation of Companies

The Role of a Chartered Accountant in the Formation, Acquisition and Liquidation of Companies

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DEDICATION

This research material titled “The Role of a Chartered Accountant in the Formation, Acquisition and Liquidation of Companies” is dedicated to God for his enabling grace, and to all computer enthusiasts who contributed to make life a pleasant experience during my research documentation.

ACKNOWLEDGEMENT

I extend my sincere gratitude to all those who contributed to the completion of this project. Special thanks to my Supervisor (Name of your Supervisor), the Head of Department (Name of your HOD), the Lecturers in the department of Accountancy / Accounting, Book Authors and Profound Scholars of existing or related project material on “The Role of a Chartered Accountant in the Formation, Acquisition and Liquidation of Companies” for their invaluable guidance, support, and expertise throughout the journey.

I am also grateful to your study area (mention any funding organizations, if applicable) for their financial assistance. This research would not have been possible without the encouragement and assistance of some stakeholders (mention any mentors, teachers, or colleagues). Additionally, I would like to acknowledge the understanding and patience of my family and friends during this endeavor. Your unwavering support has been a constant source of motivation. Thank you all for being part of this meaningful endeavor.

The Role of a Chartered Accountant in the Formation, Acquisition and Liquidation of Companies

TABLE OF CONTENTS

PRELIMINARY PAGES

CHAPTER ONE

  • 1.0 Introduction
  • 1.1 Background of the study
  • 1.2 Statement of the problem
  • 1.3 Purpose of the study
  • 1.4 Research question
  • 1.5 Hypothesis
  • 1.6 Delimitation of the study
  • 1.7 Significance of the study
  • 1.8 Definition of terms

CHAPTER TWO

  • 2.0 Literature Review
  • 2.1 Introduction
  • 2.2 The role of chartered accountants in the formation of companies
  • 2.3 The role of chartered accountants in the acquisition of companies
  • 2.4 The role of chartered accountants in liquidation of companies
  • 2.5 The role of chartered accountants in corporate failure and business survival
  • 2.6 The Problems of Nigerian Accountants
  • 2.7 Summary of the reviewed literature

CHAPTER THREE

  • 3.0 Summary, Conclusion and Recommendation
  • 3.1 Introduction
  • 3.2 Summary of findings
  • 3.3 Recommendations
  • 3.4 Conclusion

REFERENCES

APPENDICES

  • QUESTIONNAIRE

    • ABSTRACT

    The accountants, the business and the economy are inseparable. They are mostly needed in resolving various conflicting investment decision, initiating and co-coordinating, meaning economic development and growth. In Nigeria, this function has largely been restricted to the reporting role; Book-keeping, Accounting and Auditing play.

    This research is thus a search part for what it should be in enhancing economic development in the area of company formation and profitable business acquisition. Moreover, in this period of high business mortality rate, what the role of the accountants in corporate rescue should be. In chapter one (1), the study lays a theoretical framework for subsequent chapters following the general introduction, the problem statement and the objective of the significance of the study and the hypothesis were also highlighted.

    The literature review is contained in the chapter two (2) of this study, works of various authors international and local journals were reviewed to elicit view on the roles and relevant of the chartered accountants in the business and economic development.

    In chapter three (3) the research methodology, procedures for data collection, methods of questionnaire design, determination of sample size and questionnaire distribution were also highlighted. Chapter four (4) is based on analysis of data collection, hypothesis testing. Finally, chapter five (5) is divided into summary of findings, recommendation and conclusion. Recommendation for resolving various conflicting issues bordering on the chartered accountant and his role, problems were drawn based on findings, which were discussed.

    The Role of a Chartered Accountant in the Formation, Acquisition and Liquidation of Companies

    CHAPTER ONE

    1.0 Introduction

    1.1 Background of the Study

    Chartered Accountants are independent practitioners whose work on a fee is based on business management or for an individual wishing to use these services as a member for accounting firm; Chartered Accountants are also external auditors.

    These are the services rendered by Chartered Accountants, they include:

    1. The service pertaining to taxes
    2. Services that are primarily accounting work
    3. Those services that are substantially of auditing nature.

    Very often, the accountants are consulted in respect to income tax implementation.

    Okufi in his contribution said that where the auditor is also a tax consultant of his client, the task will be more cost effective and efficient. Hence, he will be able to make comprehensive report to avoid as much tax as possible ad avoid unnecessary duplication. Okafor (1999:27) sees the designing of accounting system or client as one of the frequency ignored aspects of chartered accountants in Nigeria.

    The chartered accountants helps in the planning stage of a company by preparing feasibility studies, writing the expected financial flow making realistic projection and determining the cost draft the article of associating or memorandum of association and formulate internal policy of any firm.

    A chartered accountant can also act as an insolvency practitioner by examining the company, to ascertain whether immediate liquidation is needed to whether the company still stands a chance to succeed chartered accountants act as a receiver by taking possession of the assets charged to debenture holders and realizing them, and withdraws from the company. He also acts as a liquidator by selling and collecting (in case of debts), the assets of the company and pays the proceeds to the entitled.

    1.2 Statement of the Problem

    Chartered Accountants play important role in the formation acquisition and do not believe that these roles add value to business firms, Peter Lougard stated that most proprietors of small scale business look upon the statutory auditor as impossible and do not feel that there is any value to the business form.

    These make it imperative on the accountants to emphasis the non-audit roles. In order to retain the prestige, improve their income, ensure the satisfaction of their client and enhance national economic development. Thus most people, including potential investors and entrepreneurs do not understand the experts services the professional accounting firms can provide then the above problem, that is the lack of understanding of the accountants, other capabilities has called for some questions answers to which will give and insight into the non auditing roles of accounting firms, especially at the formation and infancy stages of business, the questions are:

    1. What are the usual problems proprietors encounter prior to at the formation and at the initial stage of their business?
    2. Which of the accountants usual functions are specially relevant to the needs of new firms.
    3. Can chartered accountant assist in the planning registration and management of young firms?
    4. To what extent can the accountants involvement helps in the firm to achieve growth and profitability?

    1.3 Purpose of the Study

    The purpose of this study is to bring to the notice of the public particularly, potential investors and entrepreneurs, the services the professional account can provide to them. It is aimed at exposing the problem to their firm will undergo at infancy and highlighting those areas where the chartered accountants will provide solution.

    Besides, it seeks to the notice of the chartered accounts, the pressing needs of today's small firms business in Nigeria context with a view to making them respond swiftly and decisively to such needs.

    In summary, the purpose of this study is to answer the question raised at the statement of the problem, which the writer believes will be of mutual benefits to the public as well as the accountants.

    1.4 Research Questions

    The researcher had the following questions in mind while carrying out the research:

    1. Which of the Chartered Accountants functions are specifically relevant to the needs of new firm?
    2. How can Chartered Accountant assist in the planning, registration and management of young firms?
    3. What problems do proprietors encounter at the formation and at initial stage of their business?

    1.5 Hypothesis

    The hypothesis for this study are as follows:

    • HO: There are no roles of chartered accounts associated with formation, acquisition and liquidation of companies.
    • H1: There are roles of chartered accounts associated with formation, acquisition and liquidation of companies.
    • HO: The roles of chartered accountants do not significantly affect formation, acquisition and liquidation of companies.
    • H1: The roles of chartered accountants significantly affect formation, acquisition and liquidation of companies.
    • HO: The identification of the roles of chartered accountants will not reduce formation, acquisition and liquidation of companies.
    • H1: The identification of the roles of chartered accountants will reduce formation, acquisition and liquidation of companies.

    1.6 Delimitation of the Study

    This study does not dwell more on the audit function of the accountant firms, since most people seems to be aware of it already and it is perhaps the most popular roles of chartered account in Nigeria.

    Due to some financial and time constraints, the research will only take a sampling of a firm and a business men in judging the extent to which chartered accountants take part in the formation, acquisition and liquidation of companies.

    The sample may be too small for reasonable conclusion to be drawn from it due to lack of finance to purchase some materials for the work, and time to et in touch with some people that will give adequate information as regards to this study.

    1.7 Significance of the Study

    The main beneficiaries of this study are the public, the accounting firms, profession accounting bodies and government.

    Public:

    The study will enable the public to appreciate the roles and duties of the chartered accountants and their capabilities in formulation acquisition and liquidation of companies.

    Accounting firms:

    Through the work, the accounting firm will also understand more clearing the problems of the firm and individual encounter which they are ion position to solve.

    Professional accounting bodies:

    The outcome of this study may aid the understanding of the new challenges facing accounting profession in their particular environment.

    Government:

    The action participation of accounting firm in the formation and development of new firms or industries will help in the realization of government objective encouraging small and medium scale firms as it will drive income through taxes and job opportunities will be created for the citizens.

    From the review studies so far, points that seek consideration has been highlighted, se we have arrived at the following assumptions.

    The Chartered Accountant plays an important role in the survival and growth of both old and new industries which the public government and other benefit from the (accountants) helps new overcome problems which they are likely to undergo at infancy.

    It is also assumed that the chartered accountant is aware of the pressing need of today's small industries or new firms in Nigeria with the view of making the chartered accountants respond swiftly and decisively to such needs of these new and small firms in Nigeria.

    1.8 Definition of Terms

    Formation:

    This means bringing into existence or bringing into being.

    Companies:

    Oxford Advance Learner's Dictionary of current English defines company as “number of persons united for business or commerce”, it means also all forms of business operated for profit.

    Chartered Accountants:

    This refers to fellows and associate members of the institute of Chartered Accountants of Nigeria whose services are rendered to the general public on fee basis.

    Acquisition:

    This refers to all forms of merger amalgamate and take over bids, it is the process of becoming a holding company or subsidiary involving significant outflow of cash from the acquiring company.

    Liquidation:

    This is an act of bringing an existing company could not continue to an end or bankrupt, it could also means bringing especially and unsuccessful business company, to an end by dividing up its property to pay depts.

    Accounting Firm:

    This means business organization consisting primary of professional accounts registered (ICAN) and are qualified to act as external auditors to other firms.

    …

    CHAPTER TWO

    2.0 Literature Review

    2.1 Introduction

    This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

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