THE ROLE OF THE ACCOUNTANT IN PROJECT FEASIBLITY AND VIABILITY APPRAISAL

(A CASE STUDY OF CASSAVA-STARCH PRODUCTION )

ABSTRACT

Nigeria  has been known to be solely dependant on crude oil as her major foreign exchange earner but with the crashing of oil in the world market during 1980’s coupled with  increased protectionism among nations, oil –generated foreign exchange dried up thereby forcing most industries which depended on imported invents to  either fold-up or  reduce capacity utilization.  The consequence of this was felt in the loss of employment opportunities for millions of Nigerians.  The youth and quarters of all the unemployed were under 25 years of age.

This scenario necessitated the structural adjustment programme (SAP) which was introduced in the country in 1986 to redress this economic imbalance.  In pursuit of this objective, backward integration for existing companies and self  employment  by  individuals have become the Nigerian corporate song.  To further  encourage investments and entrepreneurship, government has set up agencies such as   the  National directorate of employment (NDE), National Economic Reconstruction fund (NER fund), and mass mobilization for social Justice, self-reliance and Economic recovery.  In addition to this, government though the  Nigerian universities commission has directed that a course in entrepreneurship development be made compulsory in al the Nigerian Universities.

Fortunately, Nigeria is endowed with a  large number of potential entrepreneurs but most of them do not possess all the funds required to translate their  project ideas into reality.  Hence  they  often have  to seek additional funds from banks and other financial sources in form of debt or equity capital.  In order to protect their investments and avert the risk of business failure, these providers of project funds usually insist, in addition to adequate collaterals, or  a proper working plan in form  of feasibility and viability report as a sina qua non for providing the required facility  the  preparation of such appraisal report usually requires the contribution of a consortium of  professional experts, notably engineers, property values, financiers and  accountant.  However, the accountant is easily the primus interposes among  all other professional in this field. because of his special training the accountant possess the skill  to provide proof of viability  of projects which is all important.

Since the attainment of the government objective of rapid industrialization depends on the survival of individual projects which in turn  is a function of the credibility of the feasibility and viability studies prepared  before  take-off, the importance of the role  of the  accountant, To this end can not over-emphasized and so this project is intended to examine this role.

CHAPTER ONE

• INTRODUCTION /BACKGROUND OF STUDY

1.1    STATEMENT OF THE PROBLEM

• OBJECTIVES OF THE STUDY
• RESEARCH QUESTIONS
• SCOPE AND LIMITATION OF STUDY
• DEFINITION OF TERMS

CHAPTER TWO

• LITERATURE REVIEW

2.1    MEANING AND SIGNIFICANCE OF FEASIBILITY AND VIABILITY APPRAISAL

• BASIC DISTINCTION BETWEEN FEASIBILITY AND VIABILITY APPRAISAL
• IMPORTANCE OF FEASIBILITY AND VIABILITY APPRAISAL
• COMPONENTS OF FEASIBILITY AND VIABILITY STUDY
• FUNCTIONS OF THE ACCOUNTANT IN THE FORMATION AND DEVELOPMENT OF NEW ENTERPRISE
• FEASIBILITY AND VIABILITY STUDY AND THE ACCOUNTANT

CHAPTER THREE

• RESEARCH DESIGN AND METHODOLOGY

3.1    METHOD AND SOURCES OF DATA

• SAMPLING METHOD
• INTERVIEW AND QUESTIONNAIRS
• DESIGN OF INTERVIEW GUIDES
• ANALYSIS OF DATA

CHAPTER FOUR

• DATA PRESENTATION AND ANALYSIS OF DATA

4.1    MARKET ANALYSIS

• TECHNICAL ANALYSIS
• MANPOWER REQUIREMENT

CHAPTER FIVE

• SUMMARY,CONCLUSIONS AND ECOMMMENDATIONS

5.1    DECISION  AND FINDINGS

• CONCLUSIONS
• RECOMMENDATIONS

BIBLIOGRAPHY

 

CHAPTER ONE

1.0    INTRODUCTION /BACKGROUND OF STUDY

          After deciding on a product of services to produce or a  project  to embark on, Umeh (1977) stated that all proposals, and economic development demand feasibility and viability appraisal.  This feasibility and viability appraisal seek  to answer two important fundamental questions which are inevitable for prudent decision making at all levels in the  society.

The enterprenur must have a long range outlook on the intended product of services or project, examine the alternatives uses of capital and account for inflation in future valve of  cash flows, forecast future events and the financial requirements and carry out sensitivity and risk analysis.  These are highly technical areas of knowledge that call for expertise skills.   Therefore, this category of  valvaation holds  out limitless  opportunities and boundless scope for  services  and reward for  the accountants, economists, valves or appraisers

This study provides an analysis of the principles of feasibility and viability appraisal and highlight the essence of the subject matter.   It also brings share  focus the  accountants essential contributions which up till now has tended to be lost.

2.1    STATEMENT OF PROBLEM

          One of the problems of s successful industrialization in the  developing countries is un doubtly the lack of knowledge of how  to formulate a  project in such a way that it’s potential profitability either from the public or private view point can be estimated on a firm basis.

Many  good business ventures are abandoned after plunging in huge amount of money, because their originators just embarked upon them because they feel there is market demand and they couldn’t  get enough  funds to execute the project but regrettably according Uwakaneme (1980:3) many businessmen do not see feasibility study as a vital part of their project but they see it as an imposition and absolute necessity for fulfilling loan requirement or attracting equity participants.  Thus the more established the report, the better.

1.2    OBJECTIVES OF THE STUDY

          The  objectives of this study be reason of the problems stated above among which ware to appraise the potentials of feasibility and viability studies in successfully carrying out a project idea, determine the main techniques of appraisals commonly adopted for analytical purposes  and also to  determine the  reasonableness of it in practical situations, identify the general function of the accountant in the formation and development of businesses, identify the specific function of the  accountant in feasibility and viability appraisal and also  to illustrate the principles and application of feasibility and viability using a small scale cassava starch as a case study.

1.3    RESEARCH QUESTIONS

          The following fundamental questions have become imperative with respect to  the problems identified and they are:

1. What are the underlying principles and significance of feasibility and viability appraisal?
2. What effect has feasibility and viability appraisal have on the survival or failure of new projects?
3. What are the functions of the accountant in the preparation of credible feasibility and viability appraisal in order to help prevent project failure?
4. How would the accountant appraisal the viability of a small scale cassava starch project in order to properly advise a potential investor on such projects?

1.4    SCOPE  AND LIMITATIONS OF THE STUDY

For a more critical analysis of this role in carrying out feasibility  and viability appraisal on cassava starch production.  The limitations of this work includes united time apart from normal academic work, there are so many other related class-room works engaged courses which in turn affected the research work.

Also research works in Nigeria, especially those adopting interview approach are beset with a lot of limitations which include mass illiteracy, dearth of reliable secondary data prejudice against the researcher and un due secrecy in which many of this were experienced in the course of this study.  And finance was also one of the limitations.

These limitations not with standing. It is believed that the findings of the study could be useful and should form a basis for further studies on the subject.

1.5    DEFINITION OF TERMS

For the purpose of this study the following are the terms used.

1. FEASIBILITY STUDY

          The stage  of fact finding aimed at determining the business profit potentials and return on  investment is known as feasibility study.  This study examine the market,  technical, financial requirement, manpower requirement e.t.c

2. FEASIBILITY AND VIABLITY STUDY

Feasibility and viability study

According to Uwakaneme (1990: 4) feasibility and viability study is an investigation of the possibility of implementing a business idea, or government project in order to obtain a certain desired minimum objective with the least danger or difficulty.

3. APPRAISAL

          Umeh (1977:5), stated that appraisal is the same as  valuation and that it is the estimate or an opinion, fixing the price for something.  An appraisal may be made off hand and delivered orally or presented in an authoritative and a comprehensively written form to the client who requires the appraisal to make a decision or to execute a policy.

4. PROJECT:

          A project is the use of one or more scarce resource during a specific time period for the  purpose of producing some economic returns or out put at latter time resources it is also the consumption in the near future of scarce or at least limited resources in the hope of obtaining in return over a longer period some benefits.

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