This study, “ACCOUNTING PROBLEMS IN THE SMALL AND MEDIUM SIZE INDUSTRIES” contains concise information that will serve as a framework or guide for your project work. The project study is well-researched for academic purposes and are usually provided in complete chapters with adequate References.
Keywords: ACCOUNTING PROBLEMS IN THE SMALL AND MEDIUM SIZE INDUSTRIES
This research work is a plan which is meant to focus on the Accounting problems in the small and medium size industries (A case study of Mr. Bigg’s and UNCLE JOE’S bread industries) since the grate number of people go suddenly and with force into business without having a sound knowledge of what business is all about, what it takes to run or manage a business. However, some reported cases problems in Accounting problems in the small and medium size industries should be looked at together with the accounting and management as one of the factors. The references is also looked at. Thus this research work can be considered essential to the small and medium size industries and also business deals. Nevertheless, this project work is limited to five chapters only excluding the bibliography. The first chapter should be all about the introduction closely followed by the literature review which should be constituted in the second chapter. Furthermore, data analysis and data presentation and analysis which will entail the testing of hypothesis through statistical tool such as percentage and tables would be made use of in this research work. Copies of questionnaires will be distributed to the staff of Uncle Joe’s Bakery Industries for collection of certain data after which an interpretation will be made before setting down the conclusion.
1.1 BACKGROUND OF THE STUDY
A basic reality of modern economic life is the inter dependence of the business. No modern business is an outlay in itself. There is no doubt whatsoever that the small scale and medium companies constitute the real fabric of a nation’s economy. And to say that the present and future economic advancement of this our great country Nigeria lies in the dynamism and growth of small-to-medium scale enterprises (SME) is not an overstatement.
This opinion was upheld during the economic conference in Lagos in 1989 at the instance of three bodies namely – the Nigerian institute of social and economic research (NISER). The National Association of small-scale industries (NASSI) and the Friedrich Albert foundation. In other words, SMEs constitute a vital engine to economic growth and development.
However, the environment in which this sector operates in Nigeria is both challenging and rewarding. It is challenging because it is fraught with the changers of risks arising from having, in the first place to invest money in a business and the problems of managing it in the country’s recessed economy.
Moreover, there is the challenge of government regulatory activities which may effect the performance of SMEs adversely.
Nevertheless, there is smiling countenance of success, should the SMEs be given dynamic leadership and properly managed in the present economically recessive climate in the country, and with the aid of the various packages of incentives given by governments (Federal, State and Local) to this group of business.
Past records of different countries that are regarded to be developed revealed that industrial revolution had been the main cause for their economic survival. The financial capacity the said developed countries has, come mainly from the acquisition industrial and technological power. Small and medium scale industries undisputedly constitute the bed-rock for any meaningful industrial development and for the acquisition of this trial and technological power.
In recent years, development economists and policy makers have become increasingly troubled by two problem found commonly in less developed and develop countries. There are slow growth in industrial development and lag in rural development, it is often suggested that small-scale and medium scale enterprises (SME) would help promote rural development as well as general urban employment. It is however remarkable to note that inspite of this high hope, little success has been achieved in Nigeria. The Indian, Japanese, South, Korean, Brazil and the Mexican Nations present veritable examples, where marginal successes in socio-economic development have been achieved utilizing small scale industrial activities. Not must can be said about the Nigeria economy and small scale industrial activities.
In Nigeria, the focus on the development of small scale industrial sub-sector dates back to the second National Development Plan (1970-1975) during which the small scale industries (SSI’s) credit scheme was initiated. This was a result of the recognition of government support for the sector in terms of funding. This credit scheme was initiated in the then 12 states of the federation with initial input from the federal ministry of industry matched with a grant from the state government in their annual budgetary provisions.
Without exception all big industrial organizations be the multinational or indigenous started in a small way. In Enugu State, small and medium scale business set-ups abound, but most of them are buying and selling products, considering the economic situation in Nigeria, the owners of business in the state, presently need to make a change other than buying and selling.
The economy of Nigeria in the past decades has undergone various states from oil boom era of 70’s to the wasteful spending time of the early 80’s and the present economic downturn resulting from the constriction in the nation’s foreign exchange earnings due to the oil glut which resulted to the introduction of Structural Adjustment Programme (SAP).
There is no doubt that the survival of entrepreneur in the present Nigerian economy depend solely on his initiative drive including quick adaptation to the environment. The question of age of buy, buy, buy, sell, sell, sell is now a thing of history in this country (Nigeria). Therefore, a sole proprietor must appreciate this fact and advance to study the economy and develop interest in any manufacturing or agricultural sector no matter how small or medium for the present and future survival of Nigeria.
However, Nigerians have generally been noticed for a high rate of business tendencies exiting among them. An average Nigerian chooses to be self employed that is to say-would prefer establishing a business of his own than being and employee. This statement is evidenced by having the biggest market in West African sub-region located at Onitsha Anambra State, Nigeria. Not withstanding the geometrical expansion of small and medium scale enterprises in the country, available records showed a drastic business failure. This problem of business failure is a global experience. Other prominent factors attributable to the high rate of business failures as it affect SMEs is in proper and insufficient record keeping as upheld by series of research findings in Enugu State, nearly every small and medium scale businesses never dreamt of keeping or maintaining requisite documents. On establishment of SMEs, there is early boom because of owners initial enthusiasm and after shot period there will be a lay and subsequent wind-up. On the adverse, any survived SMES may not yield a fruitful result for easy comparison with the bigger ones. In developed countries where small and medium scale enterprises maintain accurate record management there is speedily growth of businesses within a minimal shape of time.
In order to sustain the growth and survival of the small scale industrial deemed it necessary to establish institutions that would provide the back-up extension services, hence the establishment of industrial development centres (IDCS). They were established to give direct grass-root support services including counseling on project identification and selection machinery, souring, conducting market studies and preparation of feasibility studies.
Again the central role which government ascribed to small industrial activities in its strategy for economic restructuring and growth informed its decision to utilize United Nations Development Programme (UNDP) technical assistance to supplement key component of the programme during 4th century programme 1992-1996. UNDP support was targeted at the five component areas considered essential for an enterprise to perform effectively. It assisted in improving the regulatory framework for policy, planning and institutional development to ensure that the new private sector led growth strategy with the active participation of small scale/industrialists is properly articulated and implemented.
Nevertheless, various schemes and policies have been established by government and financial institutions as an aid to SMEs.
In 1985, the Nigeria stock exchange recognized the complementary role of small scale business though the establishment of second –tier market where this category of business could obtain loans up to N5 million for expansion, modernization and development of projects. The world bank gives some support by way of grants to the federal government for the development and rehabilitation of SMEs. In February 1990, the European Investment Bank and the Nigeria Government reached and advance stage towards, the leasing of N445m to finance medium and small scale business in Nigeria.
In 1990, the credit policy guidelines of the CBN directed Commercial Bank and Merchant Bank to increase their total credit outstanding to small scale enterprises from 16% to 20% others are the Nigeria industrial development bank, Nigeria Association for small scale industries the Nigeria Bank for commerce and industry, the African Development Bank, National Directorate of Employment and National Economic Reconstruction fund, all these influence the status of SMEs in the country.
Records are required in a business for the following reasons.They serves as evidence of policies and activities of the business.
They show dearly the decisions reached by the management, actions carried out in the course of business and the result of these actions. These policies can be tendered as exhibit(s) during court process as a legal backings and to the regulatory authorities such as Tax Board Inland Revenue to show that regulations are strictly adhered to on the part of the entrepreneurs, these records help them in the assessment of stewardship and control practiced by heir managers in the management of the property under their care.
Secondary, it provides information useful for daily management of the affairs of the business in general. Their contribution towards the day-to-day management of the organization leads to quick settlement of cost management.
Even today, the economics policy blue print (EPB)released by the present administration to guide economic re-invention and engineering for the of 1999-2003 apportions high priority to small and medium scale enterprise and the informal sector as key instruments for achieving the targeted goals enumerated in the policy. There is little doubt that it has been fully realized and acknowledged that an energized and fully functional SMEs sub-sector has the potential of transforming the industrial base of the country as well as the propellant for the much needed economics rejuvenation.
Hence this project titled “Accounting problems of small and medium enterprises in Enugu State. A case study of uncle Joe’s Bakery and Mr. Bigg’s is to demonstrate the importance of financial record keeping and good management of SMEs to ensure that every bit of Naira and kobo of the industry is used judiciously so that the aim and objectives of the business is achieved (i.e. maximizing profits and minimizing loss).
1.2 STATEMENT OF PROBLEM
It is now a common knowledge that the Nigerian economy. Presently and in the past years experienced drastic failure or set back as regards small and medium scale enterprises. There is no authentic or systematic information concerning the organization where as the business owners or managers could embark on meaningful/decisions. On this, regards opinions or decisions could not be taken based on the present facts and figures on the business financial stand. This position could result to non growth of business and fall in the capital structure of the organization
This problem and others not mentioned here confronting the small and medium scale enterprises has attracted numerous sympathy. It is also on record that the number of survivors from this problem seen not to have gloomy days a head. Very many people have apportioned the blame on improper or insufficient accounting record keeping or maintenance in conjution with managerial problems. The aforementioned facts are not the only known factors which may hinder the progress of any business. Accounting to management other variables include finance, state of economy, effective communication between managers and other employees experience and devotion to duty and of course, satisfactory accounting system.
For the purposes of this study, it is assumed that all the variables above listed exist in consonance with business.
1.3 OBJECTIVES OF THE STUDY
The study oblige that we search deeply into accounting record keeping system of small and medium scale enterprises (SME’s) in Enugu State Mr. Bigg’s and Uncle Joe’s Bakery, to find out the method of keeping records problems associated in doing so, and whether the system is enough for the business. Furthermore, the study will determine the study will determine the scope of which poor management has brought a set back to the progress and expansion of the organization. The study will also emphasize reason why SMEs should keep sufficient records and want to be involved greatly in the country’s industrial change. The study also will intend to marshal out a simple but effective system of accounting for both small and medium scale industries. Based on the result gotten from the study appropriate recommendations will be made regarding proper books of accounts necessary to be kept by SMEs for the purpose of profit maximization, management adequacy including high growth.
1.4 RESEARCH QUESTION
On these bases, Questions shall be attempted in finding solution to the problem based on the topic of the research work and all information gathered from the respondent shall be sued to analyze the outcome of the result. In order to throw more lights on this topic the following questions shall be asked on the field.
1. Does accounting problems have any effects on SMEs industries?
2. Does SMEs experience success despite improper and inadequate accounting records?
3. Does Lack of managerial planning, forecasting and control contributes immensely to SMEs failure or downfall?
4. Does accounting problems have any effective on the SMEs performance?
H1 : Accounting problems does not have any effects on SMEs industries
H02: SMEs do not experience success despite improper and inadequate accounting records
H03: There will be no significant relationship between lack of managerial planning, forecasting and control contributes and the failure or downfall of SMEs
Ho4: Accounting problems does not have any effective on the SMEs performance.
1.6 SIGNIFICANCE OF THE STUDY
This study would benefit both businessmen and farmer because it will enable them to know the possible causes of poor industrial development and reasons for infact mortality of small and medium enterprise
Keywords: ACCOUNTING PROBLEMS IN THE SMALL AND MEDIUM SIZE INDUSTRIES