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THE IMPACT OF ACCOUNTING STANDARD IN THE DEVELOPMENT OF SMALL SCALE BUSINESS (A Case Study of Cussion Plc Aba Branch)

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 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 75 ::   Attributes: Questionnaire, Data Analysis, abstract, table of content
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CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF STUDY

In today’s business in Nigeria, a lot has been said about the accounting standard in most small businesses. It is evident that the role of accounting standard has increased overtime in the growth and development of small scale businesses in Nigeria.

There are many accounting standards in the world, with each country using a version of their own generally accepted accounting principles (GAAP). These allow firms to report their financial statements in accordance with the GAAP that applies to them.

According to (Modugu and Eragbhe, 2001) stated that the complication arises when whether the firm does business in multiple countries. However, the harmonization and international convergence of accounting standards and practices are of interest to business owners and researchers in both developed and developing countries.

It is evident according to (Securities and Exchange Commission, 2010 as cited in Winney, Marshall, Bender, Swiger, 2010) that for the past decade, members of the accounting profession have been anticipating the adoption of the IFRS and this anticipation has prompted a lot of academic research on the subject of adoption of IFRS by different countries of the world- Nigeria is not exempted. As a result of this, the Financial Reporting Council of Nigeria (FRCN) announced the transition date for adopting IFRS for SMEs in Nigeria to begin from January 1, 2012 (Report of the Committee on Road Map to the Adoption of International Financial Reporting Standards in Nigeria, 2010).

According to (Modugu and Eragbhe 2013) stated that Small and Medium Enterprises (SMEs) contribute over 90% of the private sector production and they are the prime sources of jobs in developing countries and play a crucial role in income generation especially for the poor. There is currently no clear cut definition of an SME in Nigeria. In the context of IFRS, SMEs are entities that do not have public accountability and publish general purpose financial statements or follow generally accepted accounting principles (GAAP). Public accountability in this context connotes entities with or seeking to have their securities traded in a public market or have assets in a fiduciary capacity as their main business activities. Since the official announcement of the mandatory adoption and implementation of IFRS in the European Union in 2002, accounting research has examined the process, especially the impact, progress and difficulties it entails (Callao et al., 2007). However, most of the previous studies on adoption of international accounting standards by countries are country specific (Gyasi, 2010) and the focus of most literature have been larger firms, sometimes only listed firms (Anacoreta and Silva, 2005). The level of preparedness of Nigeria for the adoption of IFRS for SMEs with regards to the roadmap announced by the FRCN is not known with empiricism. The place of sound accounting and internal control systems in any business, irrespective of its scale, cannot be overemphasized. The study wishes to examine the impact of accounting standard in the development of small scale business using cussion plc. Aba branch as the case study

1.2 STATEMENT OF RESEARCH PROBLEM

What really instigated the study was due to the challenges faced by most small scale business in the areas of proper accounting records and reports. A vast majority of small-scale businesses cannot afford the complexity of a detailed accounting system even if they would have, hence, the existence of single entries in their books and in some cases on incomplete records (Wood, 1979; Onaolapo et al., 2011). Audits of small scale enterprises have proven to be among the most worrisome for professional accountants because of the inadequacy of the internal controls. Except for statutory demands, small and medium scale enterprises hardly give serious thoughts to the process of sound accounting, yet the inadequacy and ineffectiveness of accounting processes have been responsible for untimely collapse of a host of them (Mukaila and Adeyemi, 2011).

1.3 AIMS AND OBJECTIVES OF STUDY

The main aim of the research work is to examine the impact of accounting standard in the development of small scale business in Nigeria. Other specific objectives of the study include:

  1. To examine the relationship between accounting standard and the performance of small scale business in Nigeria
  2. To examine the roles of the adoption of IFRS in the growth and development of cussion Plc. Aba branch
  3. To examine the contribution of small scale business to the economy of Nigeria since the adoption of IFRS
  4. To investigate on the factors affecting the performance of small scale businesses in Nigeria
  5. To determine the challenges facing Small and Medium Enterprises (SMEs) in adopting effective financial accounting reporting in Nigeria
  6. To ascertain the contribution of poor credit facilities to inadequate accounting records in SMEs in Nigeria
  7. To proffer solution to the above stated problems

1.4 RESEARCH QUESTIONS

The study came up with research questions so as to ascertain the above stated objectives. The specific research questions are stated below as follows:

  1. Is there any relationship between accounting standard and the performance of small scale business in Nigeria?
  2. What are the roles of the adoption of IFRS in the growth and development of cussion Plc. Aba branch?
  3. What are the contributions of small scale business to the economy of Nigeria since the adoption of IFRS?
  4. Are there any factors affecting the performance of small scale businesses in Nigeria?
  5. What are the challenges facing Small and Medium Enterprises (SMEs) in adopting effective financial accounting reporting in Nigeria?
  6. How to ascertain the effect of poor credit facilities to inadequate accounting records in SMEs in Nigeria?

1.5 STATEMENT OF RESEARCH HYPOTHESIS

H0: There are no challenges facing Small and Medium Enterprises (SMEs) in adopting effective financial accounting reporting in Nigeria

H1: There are challenges facing Small and Medium Enterprises (SMEs) in adopting effective financial accounting reporting in Nigeria

H0: there is no significant relationship between accounting standard and the performance of small scale business in Nigeria

H1: there is significant relationship between accounting standard and the performance of small scale business in Nigeria

1.6 SIGNIFICANCE OF STUDY

The study on the impact of accounting standard in the development of small business will be of immense benefit to the owners of small scales businesses as it will discuss the importance of proper accounting standard in the development of small business, the study will also discuss the challenges facing the small scale businesses in Nigeria. Finally the research work will be of great benefit to cussion Plc. And other researchers that wishes to understand more about the adoption of IFRS in small scale business.

1.7 SCOPE OF STUDY

The study on the impact of accounting standard in the development of small scale business is limited to cussion Plc. As it will cover the importance of proper accounting standard in the development of small business, the study will also discuss the challenges facing the small scale businesses in Nigeria

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

1.9 DEFINITION OF TERMS

IFRS: International Financial Reporting Standards (IFRS) are a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements

SMEs: The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons

REFERENCES

ACCA (2012). Financial Reporting. Paper F7 (International) Course Notes. BPP Media Ltd. London. 2. Adetula, D.T., Owolabi, F. and Onyinye, O. I. (2013). International Financial Reporting Standards (Ifrs) For Smes Adoption Process in Nigeria. European Journal of Accounting Auditing and Finance Research 2(4), pp.33-38, June 2014 3. Anacoreta, L. and Silva, P. D. (2005). International Accounting Standards for SME’s: an exploratory study. Unpublished. Available at: http://www.porto.ucp.pt/feg/links/papers/IASB_on_SME_Luisa_ Anacoreta_e_Duart Silva.pdf. Retrieved November 11, 2011. 4. Bohman, H., and Boter, H. (1984). Planning in small and medium-sized firms–The challenges and premises of the strategic planning. Department of Business Administration and Economics, Umea University Sweden. 5. Callao, S., Jarne, J.I., and La´─▒nez, J.A. (2007). Adoption of IFRS in Spain: effects on the comparability and relevance of financial reporting. Journal of International Accounting, Auditng and Taxation, 16(7), 148-178. 6. Chittenden, F., McConnel and C. Risner (1990), The Role of the Accountancy Profession in the Growth and Development of small business, ACCA research report No. 18, London: CEAT. 7. Clute, R.C., and Gitman, G.B. (1980).

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Paper Information

Format:MS WORD
Chapter:1-5
Pages:75
Attribute:Questionnaire, Data Analysis, abstract, table of content
Price:₦3,000
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