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

Abstract

The accountants the business and the frugality are thick. They’re substantially demanded in resolving colorful disagreeing investment decision, initiating andco-ordinating meaning of profitable development and growth. In Nigeria, this function has largely been confined to the reporting part, book- keeping account andauditing.This exploration design is therefore a hunt part for what the part of the accountant, has been and what it should be in enhancing profitable development in the area of company conformation and profitable business accession. also in this period of high business mortality rate, what the part of the accountant in commercial deliverer shouldbe.Chapter one of the study lays a theoretical frame for posterior chapters. Following the general preface, the problem statement and the ideal of the study which handed base for the significance of the study and the thesis were stated. The limitation of this study were alsohighlighted.In the literature review as contained in chapter two, workshop of colorful authors, transnational and original journals were reviewed to evoke views on the places and applicability of the account in business and profitabledevelopment.Chapter three, exploration methodology, description of population and slice procedure for data collection were bandied. styles of questionnaire design, determination of slice sige and questionnaire distribution were alsohighlighted.Chapter four was grounded on analysis of data collected. This? Chapter wassub-divided into data analysis, thesis testing and summary. Chance table, figure and history were precisely employed for proper understanding and testing ofhypothesis.Finally, chapter five was divided into summary of findings, recommendation and conclusion. Recommendation for resolving colorful disagreeing issues skirting on the accountant and his part problems were drawn grounded on findings which were bandied.

Offer

A offer on the part of the public accountant in the conformation, accession and liquidation ofcompanies.The accountants, the business and the frugality are thick. They’re substantially demanded in resolving colorful disagreeing investment decision, initiating andco-ordinating meaning of profitable development and growth. In Nigeria, this function has largely been confined to the reporting part book- keeping account and auditing.

This exploration design is therefore a hunt part for what the part of the accountant has been and what it should be in enhancing profitable development in the area of company conformation and profitable business accession. also in this period of high business mortability rate, what the part of the accountant in commercial recue shouldbe.Chapter one of the study will lays a theoretical frame for posterior chapters. Following the general preface the statement and the ideal of the study will feeds base for the significance of the study and the thesis will be stated. The limitation of the study will alsohighlight.Literature review will contain in chapter two, workshop of colorful authors, transnational and original journals will also review to evoke views on the places and applicability of the account in business and profitabledevelopment.Chapter three, exploration methodology, description of population and slice procedure for data collection will be bandy. styles of questionnaire design, determination of sample size and questionnaire will also punctuate. Chapter four will predicate on analysis of data collected. This chapter will be divided into data analysis, thesis testing and summary. Chance table, numbers and history will precisely employ for proper understanding and testing ofhypothesis.Finally, chapter five will be divided into summary of findings, recommendation and conclusion. Recommendation for resolving colorful disagreeing issues skirting on the accountant and his part.

Chapter

Preface

The public accountant is an independent guru who works on a gee base for business operation or for individualities wishing to use his services or as member of an account establishment. utmost public accountants are also externalauthors.The generally known services offered by the public accountant include the following

1. Those that are mainly of auditing nature

2. Those who involve primarily counting

3. Those pertaining to levies.

utmost people perceive the places of the public accountant as being limited to the traditional one balance distance in the process of auditing the fiscal statements of companies.

The have failed to realize and appreciate that the public accountants provides services in respect of problems relating to conceptualization of business ideas, conformation, enrollment and development of business most importantly on how to do with the collection and donation of account data. They also take over routine book- keeping for enterprises without acceptable book- keeping labor force.

veritably frequently, the accountant is consulted with respect to income duty recrimination of visionary deals. In his donation, Okugi said adviser of his customer, the task will be further cost effective and effective. Hence, he’ll be suitable to make comprehensive report to avoid as important duty as possible and avoid gratuitous duplication.

Okafor2 see the designing of counting systems for guests as one of the constantly ignored aspects of public accounts in Nigeria.

The public accountant helps in the planning stage of company preparing feasibility studies, writing the anticipated fiscal inflow- making realistic protrusions and determining the cost recrimination of intended systems. He alsoco-ordinates and uses the input from other professionals to cipher, dissect and expose the fiscal counteraccusations of the entire line of action.

Nnam3 added that the accountancy enterprises perform appraisal of investor to determine their viability and profitability and to check the stability of anticipated cash inflow.

The public accountant draft the papers of Association, memorandum of Association and formulate the in internal policy of the enterprises. These documents are also filed with the Register of companies. He can also help in the medication of budget, business plan and installs control systems and procedmes that induce necessary data from which information demanded by business if reused. In same circumstances, a new or being company may calculate on the public accountant for reclamation of some technical force or he can shoot his staff on recommendation to a new business for specified period during which the establishment is anticipated to stand on its own4

He also has important places to play in the diversification and enhancing of the company’s profitability and stability of income. This is done through regular, premonitory service on the stylish way to use ideal finances. He should be suitable to advise on the more profitable lines in the product process, the services which induce further value added, which services, products or departments should, which services, products or departments should be initiated and which should be discontinued. The accountant gathers and analyzes quantitative information and gives opinion as to which volition makes profitable sense5.

The public accountant can also act, as an bankruptcy guru by examining the company to the whether immediate liquidation is demanded or whether the company still stands a chance to succeed.

He can act as a receiver by taking possession of the means as charged to debenture holders and realizing them and which he withdraws from the company.

He can also act as liquidation by dealing and collecting( in case of debts) the means of the company and pays the proceeds to the entitled.

THE NATURE OF ACQUISITION, JUNCTION AND LIQUIDATION

Acquisition refers to all form of junction, admixture and take- over flings. It’s the process of getting a holding company or attachment involving significant cash out inflow from the acquiring company to the acquired company’s shareholders as consideration for acquired interest.

Combinations, also called pooling of interests, describe an accession through the exchange of equity shares. Specifically, the parent company issues its own share instrument in exchange of equity shares instrument of the attachment. There’s no purchase/ trade sale between the cells, so the long term investment by the parent company is carried at the book value of the shares issued as consideration.

Admixture is the junction of two or further companies or undertakings of the interest in business or undertakings. The junction could be temporary and involve only certain aspects of a business operation( eg the pooling of orders or deals or homogenized co-operation in product or procurement of inputs) this is appertained to as partial junction.

It can also be a complete admixture and generally involves the immersion of one or two companies by an being company by new company especially formed for that purpose.

In its narrowest sense, it’s the conformation of entirely new company to acquire being separate concern. This bear the winding up of the being companies. In its wider sense, it could be used to mean immersion whereby there’s new company conformation and is a two company situation, there will be only one liquidation.7

Liquidation can be described as a situation whereby authorization is given to vend business of the old company to a new company and in consideration to accept, shares in the new company for the agreed asset value. The only asset in the hands of the liquidator is now these new shares and he distributes them to the old shareholders. The end result is the shareholders now hold share in the new company at the agreed reduced valuation and the new company owns the business.

The top advantage from the point of view of the shareholders is that differing shareholders have the right to acquire the liquidator either to hesitate from carrying the resolution of effect or to buy their shares at an agreed price.

REASONS FOR ACQUISITION, JUNCTION AND LIQUIDATION

Expansion is a major objects of utmost associations. generally a large and profitable company with acceptable records invests on other companies.

The investment can be short term or long term; it can be an investment in debt securities or in the share capital of the other company. When a company invests in the shares( ordinary or preference) of another company, the reason may be just to employ idle case and earn some fresh profit or it could be to enhance growth through the product and trade of new products and services.

fresh reasons may be to gain access to new requests and force sources or to exercise influence and control over the company whose shares are acquired. When the desire is to prompt control a company invests in the ordinary shares of the other company.

Companies who couldn’t stand the presume of the government profitable policy collapsed due to structural Adjustment programme( SAP) introduced in 1986 which was directed towards encouraging Nigerian companies to reference their raw accoutrements locally and the tone- sustaining. To give themselves with a strong common front against the artificial constraints, numerous other average companies came together to form a junction. And yet the big one surfaced to acquire the weak companies. For case, seven- up Bottling company acquired ’ schwapps ’, switch Sisters Limited also intermingled with liptons Nigeria limited.

In Nigeria moment, the number or record of company, failures combinations and accession is interesting and the trends from all suggestions are anticipated to continue as further and further companies continue to absorb the strict impact of ASP. And only those companies with the correct and acceptable blend of coffers can survive.

Statement Of Problems

Peter Langard stated that the most possessors of small businesses look upon the statutory inspection as an duty and don’t feel that there’s any value to the business establishment from it.

Allowing makes it imperative on the accountants to emphasis thenon-audit places in order to retain the prestige, ameliorate their income, insure the satisfaction of their guests and enhance public profitable development.

therefore, utmost people including implicit investors and entrepreneurs don’t understand the expert services the professional account establishment can give them.

The below problem, that’s the lack of understanding of the accountants other capabilities has called for some questions, answers to which will give an sapience into thenon-auditing places of account enterprises, especially at the conformation and immaturity offered of business. The hunt are

( i) What are the usual problems possessors encounter previous to, at the conformation and at the original stage of their business?

ii) Which of the accountants usual function are specifically applicable to the requirements of new enterprises?

iii) Can public accountants help in the planning, enrollment and operation of youthful establishment? To what extent can the accountant’s involvement help the enterprises to achieve growth and profitability?

iv) Is it doable and judicious for public account enterprises to initiate enlightenment programme through association of lectures, councils, forums and so on with an end of encouraging implicit entrepreneurs to set, up business?

Purpose Of Study

The purpose of this study is to bring to the notice of the public particularly implicit investors and entrepreneurs, the services the professional accountants can give them.

It’s at exposing to them the problems enterprises will suffer at immaturity and pressing those areas where the public accountants will readily give succour.

Besides, it seeks to bring to the notice of the chartered accountants, the pressing requirements of moment’s small enterprises in the Nigerian environment with a view to making them respond fleetly and decisively to similar requirements.

In summary, the purpose of this study is to answer the questions raised at the problem statement which this pen believes will be of collective benefit to the public as well as the accountant.

Significance Of Study

The main heirs of this study are public, the account enterprises, professional account bodies and government.

PUBLIC This study will enable the public appreciate the duties of the accountants and their capabilities. In particular it’ll be useful to expiring entrepreneurs who may find in the account enterprises, a useful instrument for realizing their dreams of owing their business and timber profit through

ACCOUNTANT enterprises Though this work, the account enterprises may understand more easily the problems enterprises and individualities encounter which they’re in position to break.

latterly, it’ll enable them to broaden their services, acquire new guests and give other affiliated services to their inspection guests. This really will help ameliorate their image and eventually their income.

PROFESSIONAL Account BODIES The outgrowth of the study may prop the understanding of the new challenges facing accountancy professional in their peculiar terrain.

Accordingly, this will guide professional accountancy bodies life institute of chartered Accountants of Nigeria,( ICAN) in determining and designing the type of training and exposure that, will be given to its being and intending members in order to equip them adequately to attack similar problems. therefore, it may find the need to introduce courses and organize lectures with a view to making good accountants acquire new chops applicable to the requirements of guests and the frugality.

GOVERNMENT The active participation of accountancy enterprises in the conformation and development of new enterprises will help in the consummation of governments objects of encouraging small and medium scale diligence. This study may show necessity of government to review certain laws that hamper the accountants from performing their places in icing survival and growth of similar enterprises and make new laws where necessary. either, government will profit from the survival of similar companies as it’ll decide income through levies and job openings will be created.

thesis

The suppositions developed for this study are

1) That the most compelling constraint to company conformation survival and growth in Nigeria is lack of acceptable business information and moxie and not, capital deficit.

2) That Nigerian investors have failed to understand completely the places and applicability of the accountant to the survival and growth of their businesses.

3) The Nigerian public Accountants have constantly emphasized their traditional places of Book- keeping Accountancy and Auditing and neglected theirnon-audit functions.

Description Of Terms

a) conformation Implies bringing into being or “ bringing into actuality.

b) COMPANIES Denotes to cooperation enterprises, sole procurement, public or private companies, or all forms of business operated.

c) PUBLIC ACCOUNTANT Those accountants whose services are rendered to the general public on figure base.

d) ACQUISITION Then refers to all forms of junction, admixture, and take- over flings. It’s the attachment involving significant exodus of cash from the acquiring company.

e) LIQUIDATION Act of bringing an being company that couldn’t continue in business to a close.

f) ACCOUNTANCY enterprises This means business association conforming primarily of professional accountants registered with ICAN and are good to be external adjudicators to other enterprises.

g) CHARTERED ACCOUNTANTS Refers to follows and Associate members of institute of chartered Accountants of Nigeria and other bodies of accountant honored in Nigeria which qualifies one to be external adjudicator of a company.