Assessment Of Accounting Personnel In Selected Small And Medium Enterprises

Project and Seminar Material for Accountancy / Accounting

Abstract

The objective of this research study is to assess accounting personnel in selected small and medium enterprises in Edo State, Staffing is one of the most important functions of management. It is an aspect of human resource management that include finding sufficient number of people who will take up employment in the business enterprise and selecting from the number of those who would be offered employment. The staffing function is housed in the human resource or personnel department of most large organizations. Finding and keeping good accounting employee is not a matter of luck but rather the result of aggressive recruitment, careful selection, proper training and motivation and thoughtful management. This may include manpower, planning to reconcile the organizations need for human resources with the available supply of labour in the local and national market.

Using the survey research method through the use of questionnaire. It was found that most SME business in Edo State do not carry out proper selection and recruitment process. This was seen to be largely caused by the fact that qualified accountant were too expensive to maintain; to most respondents, the fees/ salaries qualified accountants charge their employers is very high and that accounting records are too difficult to understand.

It was recommended that the owners of SME businesses should always carry out proper job analysis to ascertain the extent kind of employees needed. This will lead to knowing the right recruitment and selection method to adopt.

Training and development program should be available for all levels of employees and not just for only new employees. This will bring about improvement of work methods adopted by the organization and objective job evaluation should always be known or stated to enhance its effectiveness.

Chapter One

Introduction

1.1 Background of the Study

An accounting system is an orderly, efficient scheme for providing accurate financial information and controls. Regulatory requirements and internal administration policies are key considerations in the design of an effective accounting system. Thus, accounting systems show the books, records, voucher, and files and related supporting data resulting from the application of the accounting process. It involves the design of documents and transactions flow through an organization. The uniqueness of small and medium scale businesses call for careful consideration in the design of accounting systems. Small and medium scale enterprises are a vast majority of businesses found in variety of primary and intermediate production of the economy. These establishments have tremendous impact on the state and well being of the nation in employment generation, as sources of national outputs and revenues, providing feedstock for large corporations They may lack the sophistication to apply the detailed accounting processes, yet the value of accounting systems to these businesses is quite profound.

Accounting personnel has the skill to creatively identify, analyse, record, classify and interpret financial information and activities of an enterprise in order to aid management take business decisions. Ezeani (2008) opines that accounting skill is a service activity and the functions of which are identifying, measuring, recording and communicating quantitative information, primarily financial in nature, about economic entities. Obviously, no single research work will capture all accounting skills. Hence, Odo (1990) enumerated some accounting skills business education graduates should be conversant with to include: stocktaking skills, profit and loss account skills, bank statement reconciliation skills, balance sheet skills, postings to journals, preparing ledger accounts and trial balance, simple partnership accounts and so on. This study will concentrate on stocktaking skills, profit and loss account skills, bank statement reconciliation skills, balance sheet skills and computer based skills required of business education graduates in entrepreneurship.

There is strong relationship between business performance and the level of training in business management especially in business accounting record keeping. Business management entails keeping proper records of the business transactions. Knowledge and skills in bookkeeping is especially one major factor that impacts positively on sustainability and growth of SMEs. Failure to record business transaction leads to collapsing of the business (Howard, 2009).

Bookkeeping have been perceiver in many nation of the world as a method for ensuring monetary development. For enterprises to continue to be in existence, develop and accomplish distinction, it ought to have dynamic unfaltering and productive bookkeeping method. In this way a good financial related records keeping has turned out to be fundamental piece of overseeing firms in today’s aggressive and challenging business condition. A good accounting record keeping enables business association to arrange appropriately and furthermore check for misappropriation of asset of the firm. Keeping appropriate books of records is a fundamental to the development and survival of business. (Ademola, 2012).Qualified bookkeeper ought to be hired to do this job; he or she ought to have the needed skills to control money as in liquidity, the answer for the achievement of any business. Qualified financial record keepers assume a basic part in leadership and strategy of doing business. Accountant with higher abilities and experience have more noteworthy impact on the basic leadership procedure of a business (Tout, 2014).

A sufficiency financial record keeping will give the needed data to help SMEs to make a right business decision. In spite of the fact that book keeping records have been referred to as one of the conceivable component adding to achievement business. (Azeko, 2015 ).

Business failures to poor administrative abilities and absence of strategic leadership and further affirmed that poor or absence of record keeping in the business and particularly to the SMEs, contribute to their collapse (Germain, 2010)

The importance of keeping proper accounts in promoting the growth of small business has been acknowledged in prior studies on small business growth and development; other studies have identified lack of keeping financial report as the most important constraint to growth in the small business sector (Tylor, 2008). Therefore this study was carried out on the assessment of accounting personnel in selected small and medium enterprises.

1.2 Statement of the Problem

The place of sound accounting personnel in any business, irrespective of its scale, cannot be overemphasized. 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 incomplete records (Wood, 1979; Onaolapo, et al., 2011). Audits of small and medium 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 Objectives of the Study

The main objective of this study is to assess the impact of accounting personnel on the performance of small and medium scale enterprises. Specific objectives include, to:

Determine the extent to which sound accounting practice is carried out among these businesses.
Examine the limitations of small and medium enterprises to implementing full accounting systems.
Evaluate the extent of compliance of small and medium enterprises with standard accounting practices.

1.4 Research Questions

Determine the extent to which sound accounting practice is carried out among these businesses.
Examine the limitations of small and medium enterprises to implementing full accounting systems.
Evaluate the extent of compliance of small and medium enterprises with standard accounting practices

1.5 Hypothesis for the Study

The following hypothesis is proposed for the study:

Ho: Accounting System has no significant impact on the performance of small and medium scale enterprises in Nigeria.

Hi: Accounting System has significant impact on the performance of small and medium scale enterprises in Nigeria.

1.6 Significance of the Study

The redirection of the economy towards self sufficiency and make it to rank among the twenty largest economies in the world by AD2020 calls for industrialization and growing the economy to meet expectations. This involves grooming the small and medium scale businesses to take the center stage in driving the economy. This effort cannot produce expected result if the targeted businesses lack accountability and thus sustain perpetual losses. Studies have shown that the strength of great nations derives from the small and medium scale enterprises who work tirelessly as backbones to the industrial giants (Arowomole and Oyedokun, 2006; Olatunji, 2000; Iopev and Kwanum, 2012). How prepared are Nigeria entrepreneurs to run organizations with valid and credible financials that could encourage or stimulate investments.

1.7 Scope of the Study

The study is carried out on the assessment of accounting personnel in selected small and medium enterprises. The study was limited to SMEs in Edo State.

Chapter Five

Conclusion and Recommendation

5.1 Conclusion

The need for an effective accounting system in promoting good performance in small and medium scale enterprises in Nigeria has been successfully studied in this research work. The problems militating against the operation of such system despite its apparent values were examined. It was observed that although small and medium scale enterprises may not be able to adopt elaborate systems, they could be encouraged by customized adaptive systems. Questionnaires were administered in the course of data collection; hypothesis was formulated and tested using the One-Way ANOVA.

Findings show that an effective accounting system in small and medium scale enterprises has profound impact on their corporate performances.

It was concluded that the adoption of sound accounting system would significantly enhance the performance of small and medium scale enterprises in Nigeria.

5.2 Recommendation

It was recommended that to encourage the adoption of sound accounting system in small and medium scale enterprises the cost of installing and operating such systems should be minimized. Accounting personnel should bear relevance to the size and needs of small and medium scale enterprises.

Accounting personnel involved in the audit of small and medium scale enterprises should adopt methodologies that adequately capture the accounting and reporting needs of the enterprises and comment on their peculiarities, if necessary, in the audit report. Also, institutions of higher learning such a universities, polytechnics and technical colleges should encourage collaborative studies to unravel the specialty of products to fit into small and medium scale enterprises constraints. The training of accountants by these institution and the various professional institutes should focus more on practical means of solving accountancy and reporting needs of small and medium scale enterprises.

Adherence to internal controls as laid down by management (even if guidance is obtained from professional accountants) is crucial to maintaining integrity of records. The roles of the professional accountant as consultants/part-time accountants are of immense value to entrepreneurs on how best to manage their business organizations for great results. Regular audit of the financial statements of various organizations will also be of great help in line with provision of Company and Allied Matters Act (CAMA, 1990).