An Assessment Of The Impact Of Asset And Liability Verification In A Company (A Case Study Of Global Soap And Detergent Industry Nigeria Ltd)
1.1 Background of the Study
Traditionally accounting of asset and liability verification is different from application of economic theory. In the past fixed asset and liability were of ten verified in term of their market value. But recently, historical method has been in use by referring to invoices and primary date available. However, this method suffers for major limitation of liability to consider price change created inflation which at present had been affecting our economy greatly.
Despite the supremacy of market value which dictates the current replacement cost, historical cost method of cost ascertainment would be used . This simply because inability to obtain market value and due to the fact that market value has been changing at an alarming and irregular manner, moreover, such method may not be useful for purpose of preparing annual financial statement, but useful for presentation.
Appropriate verification enable correct financial position to be disclose and also help in knowing where a company presently stands such information do reveal general strength his and weakness of a company.
However over the past years, most company were not verifying their asset and liabilities, the deficiency had lead too problems
Inability of discover the effect of manipulation of the asset and viability by staff and management personnel inability to show actual financial position and many other understanding the value of asset were an assets purchase in a particular tear maybe recorded in the book of the company
If the asset and liability are not accurately verified in accordance with accounting principles, and discourse is made it may lead to wrong figures being given to the
Inland, revenue Revenues board, if discovered, it may lead to count case with all the problem lightened above, it could be seen that verification is an important aspect of any business that intent to successfully operation in the modern and culture business environment.
A flow chart of the system of authorization custody and record leaping may be constructed in order to explain control over leaping may be constructed in order to explain control over our asset and liabilities transaction at each point in flow chart where an explanation of some action given, documentary evidence must be available.
Verification of asset and liabilities is also relevant to the economy in that, it reduces the level of fraud to be performed in the company
1.2 Statement of the Problem
Asset and liabilities verification is a means by which asset and liability of a company are determined by of relevant proof.
Die to unrealistic of the market value method in verifying asset and a liability, historical method is now adopted.
Some problems are often faced in the absence of verifying asset and liability, such as false declarations of ownership and existence of fixed asset and declaration of liabilities incurred
The above mentioned problem are been reduce to the minimum with the impact of assets and liabilities verification.
1.3 Objective of the Study
The purpose of the study is to provide useful and material as to correct people with erroneous believe and to educate such people on the importance of fixed asset and liability and how it aid management goal and objective its also intended to correct the wrong speculation of show minded individual or as a result of their ignorance that asset of public.
Organization are not always cared of internal audit or the role. Internal audit plays in the formulation of managerial
1.4 Scope of the Study
This stud will focus it attention on the assessment of the impact of asset and liabilities verification of global soap and detergent industries (Nig) limited ilorin and it with cover area relatives to cost, authority valuation, existence beneficial, ownership and presentation of asset and liability. The study will be try to ascertain the impact of verification methods if any adopted by the company in the past.
1.5 Scope of the Study
This study will focus it attention on the assessment of the impact of asset and liabilities verification of global soap and detergent industries (Nig) limited ilorin and it will cover area relatives to cost, authority valuation, existence, beneficial, ownership and presentation of asset and liability. The study Will be try to ascertain the impact of verification method, If any adopted by the company in the past.
1.5 Limitation of the Study
Certain limitation of the study needs to be recognized from on set.
The research is limited to a private company in ilorin the quaintly of this research depends fully in the nature and quality of data obtains from the company. Their fore, secrecy in realizing requires data will badly affect the output to be obtained. Other limitations include shortage of Find and timing.
1.6 Plan of Study
This project will divide into five chapter one, discuss the introduction, statement of problem, objective of study scope, limitation and plan of the study as well as definition of some term.
Review of related literature will examine in chapter two. Chapter three discusses research methodology and given historical background of the study a case study of global soap and Defer ground industrial limited ilorin
Chapter four will discuss presentation and analysis of data while chapter five will be on summary of findings, conclusion and recommendation
1.7 Definition of Terms
Asset may define as a specific right which can be acquire as a current result past transaction.
Asset classified into this one accounting period. eg freehold land and buildings plant and machinery. Furniture and fittings motor vehicles
These are asset produce or acquire for resale. These are the category of asset are either inform of cash or rate meant to be converted into cash e.g cash at hand stock in hand at the end of asset are either inform of cash or rate meant to be convert into cash e.g cash at hand, at the end of the period, sundry debtor repayment etc asset can be tangible or intangible. Tangible asset are the asset that have material existence and can be seen or touch and they are real in nature, intangible asset have on material existence eg. Good will, copyright patient, preliminary expanses. Asset can be also faction. These is a fiction asset is and tangible asset that have no values. Goodwill and patient through intangible. They are not valueless; they have values that can be exchanged for money.
These are the obligation that a business has to meet depending on the tunes span of such obligation. Liabilities are divided into two;
- Current Liabilities; these are the obligation that must be met within a short period of time which should not exceed one year. They are bank overdraft short term loan, trade creditor
- Log-term LIABILIKES; these liabilities have longer life time liabilities more than one year are regarded as long term liabilities e.g long ter loan on mortgage, bond etc.
5.0 Summary, Conclusion and Recommendation
The study so far as analyzed and discussed the assessment of the impact of asset and liabilities verification of a company.
All along global soap and detergent industry li ited ilorin has been chosen for the verification method adopted by the company internally and sees it effect of the security of the asset.
The definition verification activities principles of verification and types of evidence available for verification have found informing part of the objectives.
The research has revealed the need for verification it principle and activities. It is clear a company need to verify its asset and abilities so as to hnow it financial position. The principles deal with cost. Authorization valuation existence beneficial ownership and presentation of fixed cost and liabilities in the financial Position.
From all that were found out by the analysis of this project it show that, at very important to verify the fixed asset and liabilities to ensure that they really exist and balance are in the audit files of the company so as to avoid negligence of the part of the auditor.
The following can be said to form part of the finding of the research based on the analysis made:
- It was discovered that the company does not maintained adequate fixed assets register in which fixed asset, cost and depreciation are recorded.
- Even though the company have an internal audit department the internal audit department is not properly instituted to enable it be responsible for the fixed asset and liabilities. As a result of this vital book of account such purchases day book and creditor ledger are not proper maintained. Hence, the companies rely on the external auditor from the headquarters.
- General ledger account such liabilities accrued expenses and creditor bank loan and direct loan are not properly maintained by the company.
Based on the finding in the research it is part rent that the researcher should make the following recommendations that will be found useful by the company and various user of accounting information.
Maintaining of fixed assets register. The company should update its fixed asset register. The company in recording the asset bought of disposed off. This will ensure proper control of capital expenditure so as to prevent wrong classification of assets .this would be done by designing standard accounting manuals which may includes.
- Establishment of standard account operational procedure for all financial function of the company
- Defining with content and allocation
- Design level of responsibilities of allocation and movement of assets
- Proper monitoring of allocation and movement of assets
- Correct book value of any asset and liabilities.
Proper posting of assets invoices. There should be proper posting of assets invoices. There should be done and posted to the general ledger.
The company ensures that its assets are well depreciated and management should be aware of what mighty be the effect of the depreciation on its asset replacement decision.
In conclusion, the management of the company should ensure that they observed the above suggestion as this would enable them have suggestion as this would enable them have good view on hoe and fixed asset and liabilities of the company are verified and it will also help preventing mismanagement.
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