The Role Of Public Accounts In The Formation, Acquisition And Liquidation Of A Company

The Role Of Public Accounts In The Formation, Acquisition And Liquidation Of A Company
Abstract
The public accountant the business and economy are inseparable they are needed for various business decision and advice on better investments. on formation of accompany the public accountant is needed to prepare the memorandum of association and ensure that the company and allied matte decree 1990 is strictly adhered to. more so, on acquisition of a company, the public accountant plays an indispensable role in order to ensure that only profitable business are acquired by prospective buyers. He does this by looking into the financial records of the company and making sure that no fraud debt is hided by the seller of the company in liquidation of a company the public also has a hand in it. In a situation where he fails to discover a fraud or financial misappropriation by the management of the company. The company as a result of that may go into liquidation. The problem of insecurity, instability in the economy and inflation rate in the country is among the problem encountered by the public accountant in Nigeria
Chapter One
Introduction
1.1 Background to the Study
The accountant and the business environment are inseparable. Accountants are the financial director of business. During period of economic boom the accountants is needed to record analysis and report financial performance of business. When the same business witnesses a turndown, when prospect of failure booms high the accountant in indispensable in the process of liquidation. So, the accountant and his roles can be most meaningful defined when viewed from the prospective of finance and business.
A healthy and competent banking sector is essential for the stability of the macroeconomic environment; therefore, the importance of commercial banks cannot be overstated because they occupy a key position in a country’s financial system and are essential agents that would lead to growth of any economy. Commercial banks also act as financial intermediation agents within a country by shifting funds between surplus and deficit sectors within an economy and facilitating the implementation of monetary policies. Banks mobilize and facilitate the efficient allocation of national savings, thus increasing the amount of investment and, therefore, of national production (Afolabi, 2004), as indicated in the work of (Olagunju and Obademi, 2012 ). By financial intermediation; Banks facilitate the formation of capital (investment) and promote economic growth (Olagunju, 2012). Before the previous statements, commercial banks experienced many banking difficulties, especially between the decade (1993-2003) that was marked by the era of banking anguish that became a source of concern not only for regulation (CBN, NDIC, etc.) but also to the general public and the policy analyst. Therefore, it was necessary to reorganize the Nigerian banking sector to restore the already dying confidence of the general public and other foreign investors who could not sleep with their eyes closed due to the weakness of the financial system established by Nigeria.
Acquisition is a strategic decisions through which firms acquire assets. The basic idea in acquisitions is to create value and maximize the existing shareholders wealth. Brealey (2007) proposed that an acquisition is a takeover, which refers to the transfer of control of a firm from one group of shareholders to another. The takeover involves all assets and liabilities absorbed by the buyer.
In Nigeria, aquisitions have been creating waves for the past few years due to the depressive state of economy. Many companies were unable to continue their operations because of the bad state of economy and the adverse effect on the enterprises. Therefore, in some sectors of the economy, there has been government intervention with decrees to stabilize the economy of some companies who have negotiated for mergers talks as a means for survival. Mostly affected in the mergers and acquisition talks are banking and insurance groups, which are unlike the conglomerates who easily settle down for integration.
However mergers and acquisitions are means of survival in a distressed economy involving corporate and strategic management motives on amalgamation of one company with another. Mergers and acquisitions have been used in so many cases to achieve company growth and expansion policies. (Akanlokhor, 2017).
NDIC (2009) outlined major purposes for adopting the consolidation option to include curtailing incessant episodes of bank distress, promotion of competitiveness and transparency in the sector, enabling the sector to effectively play its developmental role in the economy, strengthening the sector to be an active participant in the regional and global financial system, and enhancing public confidence in the banking industry.
Though the exercise was adjudged successful because it led to huge increases in the capital and asset base of the consolidated banks as well as their liquidity levels, stability of the sector was lived only shortly, as serious signs of systemic capital inadequacy and illiquidity was observed in the sector within three years of implementation of the programme. One school of thought argued that the inability of the sector to sustain the gains of the exercise was hinged on the mode of implementation.
On the 17th of December, 2018 Diamond Bank Plc confirmed the acquisition by Access Bank Plc, in a bid to become the biggest retail bank in Africa. Diamond Bank confirmed that the merger would involve Access Bank acquiring its entire issued share capital in exchange for a combination of cash and shares in Access Bank via a Scheme of Merger.
Since the importance of consolidation as a measure of reconstructing the banking sector cannot be overemphasized, this topic became an area of interest to assess the effect of acquisitions on the performance of the commercial banking sector in Nigeria. In this study, Access bank Plc is selected as the case study.
1.2 Statement of Problem
Recent bank mergers and acquisitions in Nigeria are attracting a lot of attention, in part due to the increased interest in the impact of mergers and acquisitions on the efficiency, profitability and capital adequacy of commercial banks.
Recently, mergers and acquisitions of commercial banks have become a key strategy to increase the profitability of commercial banks. In addition, in the current context of restructuring of the banking sector, in particular: mergers and acquisitions, acquisitions, mergers, etc. it would have increased the capital adequacy of commercial banks, and studies have shown that bank failures are caused mainly by factors that range from; Liquidity, insolvency, fraudulent practices, insufficient capital and bad management in commercial banks. Mergers and acquisitions have become an essential driver of the profitability of commercial banks. It has become one of the most powerful characteristics of most commercial banks, improving their return on assets (ROA) and return on equity (ROE) respectively. Therefore, it is important to examine the impact that mergers and acquisitions can have on the performance of the banking sector.
Financial performance has been the driving force behind mergers and acquisitions. Previous investigations has not been totally clear on the effect of mergers and acquisitions on the financial performance of financial institutions in Nigeria. This study also focused on the recent acquisition of Diamond Bank Plc by Access Bank Plc, with the need to examine the role of public accounts in the formation, acquisition and liquidation of Access Bank. This is the gap that the research seeks to fill when answering the research question: Do acquisitions have an effect on the financial performance of Access Bank plc?
1.3 Objectives of Study
The study is aimed at highlighting the role of public accounts in the formation, acquisition and liquidation of a company.
To achieve this, the following specific objectives were stated
- To examine the impacts of mergers and acquisition on the performance of commercial banks.
- To evaluate the effect of mergers and acquisition on the capital structure of banks in Nigeria
- To find out if mergers and acquisition lead to stability in banks in the long-run.
- To examine if mergers and acquisition improve profitability in bank.
1.4 Research Questions
This study will stimulate numerous questions in order to obtain needed information for the formation of hypothesis and to establish the scope of this research work, the questions include.
- Does merger and acquisition have any effect on the performance of commercial banks?
- What is the effect of mergers and acquisition on the capital structure of banks in Nigeria?
- Does mergers and acquisition lead to stability in banks in the long-run?
- Does mergers and acquisition improve profitability in bank?
1.5 Statement of Hypothesis
Hypothesis I
- HI – The use of mergers and acquisitions techniques enhances organizational survival in a distressed economy.
- HO – The use of mergers and acquisitions techniques does not enhance organization survival.
Hypothesis II
- HI = Mergers and Acquisitions enhance profitability through cost reduction resulting cost reduction resulting from economics of scale operating efficiency and synergy.
- HO = Mergers and Acquisitions does not enhance profitability through cost reduction resulting from economics of scale operating efficiency and synergy.
1.6 Significance of the Study
The major importance of this study is to evaluate the merger and acquisition in terms of the impact on the efficiency of commercial banks in Nigeria, to study the measures to restore solvency, to increase profitability and to restore the trust of the general public (including: investors).
Knowledge of mergers and acquisitions and other business combinations in the business world as a way out of financial difficulties will improve the country’s economic development and, in terms of economic recession and recommendations, will be of great importance to the company and other similar companies. In general, this study aims to strengthen the financial strength and stability of commercial banks in Nigeria.
1.7 Scope of the Study
This study intends to investigate the the role of public accounts in the formation, acquisition and liquidation of Access Bank Plc. In studying acquisition of banks, merger is also very important. Therefore, this study examines the effect of merger and acquisition on the performance of Access Bank Plc. The study was carried out on the staff of Access Bank Plc, 32 Aka Road, Uyo, Akwa Ibom state.
1.8 Definition of Terms
Acquisition:
Acquisition may be defined as an act of acquiring effective control over the assets or management of a corporation by another corporation without a combination of companies or corporations. It is also defined as the process of taking control of a company (Financial and Banking Dictionary).
Capital Adequacy:
Capital adequacy is the ability of a bank to meet the needs and desire of its depositors and other creditors. It is simply the proportion of risk capital to risk.
Commercial Banks:
Commercial banks are organized on a joint stock company system, primarily for the aim of earning profit. They can be of either the branch banking type, as seen in most of the countries, with a large network of branches, or of the unit banking type as seen in a country like USA, where banks operation are confined to a single office or to a few branches within a strictly limited area.
Consolidation:
Consolidation can be defined as a combination of two or more companies into a new company. In this form of merger, all companies are legally dissolved and a new entity is created.
Corporate Restructuring:
Corporate restructuring can also be referred to as a business combination and includes mergers and acquisitions (M & A), mergers, acquisitions, leveraged acquisitions, capital restructuring, sale of units trade and assets, etc.
Absorption Merger:
Absorption merger is a combination of two or more corporations of an existing corporation in which one corporation retains its identity and the others lose theirs. Example: Access Bank = [Access Bank, Diamond Bank, Marina International Bank and Capital Bank International].
Consolidation Merger:
Consolidation merger is a combination of two or more companies to form a new one. In this type of merger, all companies are legally dissolved and a new entity is formed. In consolidation, the acquired company transfers its assets, liabilities and shares to the new company. Example of Unity Bank = [Intercity Bank PLC, First Interstate PLC, Tropical Bank, Center-Point Bank PLC, Bank of North, New African Bank, Bank Corporation, Pacific Bank, New Bank of Nigeria].
Mergers:
A merger is said to occur when two or more companies combine to form one company.
Return on Asset:
Return on asset is calculated by dividing a company’s annual earnings by its total assets. ROA indicates how profitable a company is relative to its total assets (Encarta dictionary).
Return on Equity:
The return on equity can be calculated as net profit after tax divided by share holders’ equity which is given by net worth. This is the net income of an organization expressed as a percentage of its equity capital.
Takeover:
A takeover is simply an acquisition. A takeover occurs when the acquiring firm takes over control of the target firm. In some case it can be said to be an assumption of control of a corporation achieved by buying a majority of the company’s shares (Encarta dictionary). A takeover can also be a conglomerate merger.
1.9 Organization of Study
The study is divided into five chapters. Chapter one deals with the study’s introduction and gives a background to the study. Chapter two reviews related and relevant literature. The chapter three gives the research methodology while the chapter four gives the study’s analysis and interpretation of data. Chapter five gives the conclusion of the study with important recommendations
Chapter Five
Conclusion and Recommendation
5.1 Conclusion
This study was carried out on the role of public accounts in the formation, acquisition and liquidation of a company. Obviously, the result of the study clearly showed that merger and acquisitions has played a vital role in the improvement of a depressed economy of among which the economy of Nigeria is not an exception. From the findings, it was discovered that the present economic dispensation in which Nigeria finds itself has being on increase since 1984. This has prompted mergers and Acquisitions as the best option among others for the concerned organisations. According to Onele 2015, organizations therefore, found out that instead of winding up, selling part of its assets etc. and thereby increase the level of unemployed in the country: they prefer entering into mergers and Acquisitions arrangement. It was also discovered that since 1982 to date, the issue of mergers and Acquisitions handled by Security and Exchange Commission has continued to be recession due to the social and political problems (Adetunji 1997).
Also aggressive takeover and indeed a real takeover bid are also absent in Nigeria. This is because of the difficulty created by the illiquidity of the market and contain regulatory requirement. Most mergers and acquisitions have been growth oriented; they also involve companies that have the same foreign affiliation. With this, one can say it has contributed to some extent to their successful consummation. It was also discovered that mergers and acquisitions transaction sometimes involves many huge amount of money. This consists of costs having different types of professionals in the course of financial advisers, Accountants, Lawyer etc. and other expenses (Onele 2015).
A company that is considering mergers and acquisitions as an option in solving its financial problem should bear in mind, the following:
- The costs of integration should be lower than the expected benefits so that the basic objectives of most integration improve financial performance, will be achieved. Although such huge transaction in mergers and acquisitions in Nigeria is yet to emerge.
- A thought investigation of the candidate company should be carried out in order to know whether the merit to be derived after the integration are considerable and in line with their stated objectives of acquiring the company. For easier consummation, companies should merge with companies having the same large companies should not be allowed by the Security Exchange Commission to merge because this might cause monopoly of industry which may not go down well with the economy of the country. At the same time, the Security and Exchange Commission should encourage mergers and acquisitions of companies for progress purpose (Akaniokbor 1987) Security and Exchange Commission.
It is yet to be confirmed whether or not the acquiring company`s post integration financial performance has improved. But there is no doubt that the efficient utilization of the acquired company would determine to what extent a growth- oriented fusion is achieved. However, in view of the Access Bank mergers, it may be said that the 2005 merger is the catalyst for the increasing their turnover and profit before tax and likewise the subsequent mergers. Therefore, as long as the needs for corporate growth exist, business integration will remain an ongoing process for both developed and developing economy. Thus, going by its numerous merits, it is especially advised that in the face of viable option for corporations and organization.
5.2 Recommendation
This research took into Access Bank Plc out of the many banks in existence in Nigeria. The following are recommendations for consideration:
- For those who would want to further explore the topic mergers and acquisition, it will be reasonable if other sectors such as: manufacturing sector, insurance sector, etc. would be taken into consideration in order to broaden the scope of the topic and to prove its applicability in another facet of the economy apart from the banking sector.
- The consolidated banks in Nigeria should hasten the expansion of their branch both in the rural and urban areas in order to bring banking service delivery nearer to their customers.
- Government and the regulatory authorities in the banking sector should impose stringent laws which must be complied with by Nigerian banks in order for the banks to be conscious on their toes by enforcing checks and balances in their various operating departments in the system.
- The Nigerian banks should be more accustomed to the latest technology in the banking sector so as to meet up with international standards and to compete favorably on the international scene.
- There should be incentives by the government to sustain the Nigerian banking industry in order to further extend their services to the rural areas. This could be by giving tax Holliday for new rural branches opened.


The Complete Material Will Be Sent to You in Just 2 Steps
Quick & Simple…
![]()
Make Payment (Through Transfer) of ₦5,000 to the Account Below
![]() | Acc No: 0811003731 |
| Samphina Academy | |
| Current Account |
Or CLICK HERE To Pay With Debit Card
| FOR STUDENTS OUTSIDE NIGERIA | |
| CLICK HERE To Pay With Card ($15) | |
| FOR GHANA STUDENTS (GHS 100) | |
![]() | MTN MoMo |
| 0553978005 | |
| Douglas Osabutey | |
![]()
Send the Following Details on WhatsApp ( 07062590260 ) After Payment
- Payment Details
- TOPIC: The Role Of Public Accounts In The Formation, Acquisition And Liquidation Of A Company
The Complete Material Will Be Sent To You On WhatsApp After Receiving Your Details
T & C Apply
Students Review
List of Related Works
The Of Accountant In Management And Liquidation Distress Banks
The Role Of A Chartered Accountant In The Formation, Acquisition And Liquidation Of Companies
The Role Of The Public Accountant In The Formation, Acquisition And Liquidation Of Companies
Corruption And Public Accountability In Local Government Administration In Nigeria
The Effect Of E-Governance On Public Accountability In Inland Revenue Service
The Role Of Ethics And Public Accountability In Fostering Local Government Development
Problem And Prospect Of Financial Control In Public Sector
Investigating The Nature Of Payroll Accounting In Public Sectors
Pricing Policy And Profit Planning In A Public Company
Impact Of Accountability On Public Sector Financial Management In Nigeria
Public Finance And Higher Education In Nigeria
Beyond Budgeting Practices In The Nigerian Public Sector
The Usefulness Of Accounting Report In A Public Company
Critical Analysis Of Value For Money Audit In Public Sector
Public Expenditures On Education In Nigeria: Issues, Estimates And Some Implications
Auditing As A Control In Public Sector Accounting
Impacts Of Accounting System Common In Public Sector


