CAPITAL BUDGETING IN THE PUBLIC SECTOR

(A CASE STUDY OF THE NIGERIAN BREWERIES)

ABSTRACT

 

Capital budgeting involve basically the estimation of the cash flow, estimation of the expected cash return and application of evaluation techniques in making investment decision.

This study looked into the extent to which the Nigerian breweries do carry out proper evaluation of capital project before making their investment decision as well as the extent in which other factors are consider in the decision process.

The study will assertion the extent to which capital budgeting evaluation techniques are used by the Nigerian breweries in evaluation of the capital budgeting project. And consider whether well evaluated project will yield adequate return for investors as well as the other factors, whether influence the selection of the project to be invested in.

In arriving at my conclusion, interview were conducted and statistical test such as the chi-square were used in analyzing data collection at the course of the study. Results of the study shows that the evaluation of the capital project by the management of the Nigerian breweries is not normally carried out effectively before making their investment decision and that a well evaluated project will normally yield an adequate return on investment.

Based on the findings, some recommendation has been put forward for consideration in chapter five.

CHAPTER ONE

1.0   INTRODUCTION      –       –       –       –       –       –       1

1.1    BACKGROUND OF THE STUDY      –       –       –       –       1

1.2    STATEMENT OF THE PROBLEM    –       –       –       –       1

1.3    OBJECTIVE OF THE STUDY  –       –       –       –       –       1

1.4    RESEARCH QUESTIONS       –       –       –       –       –       1

1.5    SCOPE OF THE STUDY-       –       –       –       –       –       1

1.6    SIGNIFICANCE OF THE STUDY     –       –       –       –       1

1.7    LIMITATION OF THE STUDY –       –       –       –       –       1

1.8    DEFINITION OF TERMS       –       –       –       –       –       1

 

CHAPTER TWO

2.0   REVIEW OF RELATED LITERATURE        –       –       –       2

 

CHAPTER THREE

3.0   RESEARCH DESIGN AND METHODOLOGY      –       –       3

3.1    RESEARCH DESIGN    –       –       –       –       –       –       3

3.2    AREA OF STUDY –       –       –       –       –       –       –       3

3.3    POPULATION OF STUDY      –       –       –       –       –       3

3.4    SOURCE OF DATA       –       –       –       –       –       –       3

3.5    SAMPLING METHOD   –       –       –       –       –       –       3

3.6    RESEARCH INSTRUMENT    –       –       –       –       –       3

 

3.7    VALIDITY AND RELIABILITY OF RESEARCH

INSTRUMENT     –       –       –       –       –       –       –       3

3.8    METHOD OF INVESTIGATION      –       –       –       –       3

 

CHAPTER FOUR

4.0   PRESENTATION AND ANALYSIS OF DATA      –       –       4

4.1    PRESENTATION OF ANALYSIS DATA     –       –       –       4

 

CHAPTER FIVE

5.0   SUMMARY OF FINDINGS, CONCLUSION

AND RECOMMENDATION        –       –       –       –       –       5

5.1    SUMMARY OF FINDINGS     –       –       –       –       –       5

5.2    CONCLUSION     –       –       –       –       –       –       –       5

5.3    RECOMMENDATION    –       –       –       –       –       –       5

BIBLIOGRAPHY   –       –       –       –       –       –       –       5

APPENDIX / REFERENCES AND QUESTIONNAIRE   –       5

 

CHAPTER ONE

 

1.0   INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Every business firm normally will like to known how it perform over a period of time, this lending to a preparation of profit and loss statement.

They also ask about their position at a particular point in time, which lead them to proper balance sheet, finally will like to know where they are heading to which led to the preparation of budget.

Budgeting is a term that is used by Marrete A.J and Sykes Allen (1974) the finance and analysis of capital project London, longman, long, confused budgeting with planning “A budget is a part of a plan”. A plan can be expressed in monetary and non-monetary terms. Any plan that is qualified in a monetary term is a budget. A budget therefore can be defined as a statement of intention qualified in monetary term by J.E Weston & Brighan in budgeting there are types of budged prepared by firms. Such budget includes capital budget, sales budget, cash budget and so on. The process of preparing capital budget is called budgeting. Capital budget are long-term budget made for acquisition and expansion of fixed assets. Many firms prepares capital budget today. Its was originated in the United State of America (U.S.A) in America it was applied by all firms before the Second War According to Western J.F and E.F Brigham (1998)101: After the Second War, many firm saw the need to plan for capital expenditure, hence it is prevalence today. The Nigerian brewery limited and other beverage are not left out in the train that prepare budget for its capital expenditure. This is however not easy as it is fought with a lot of problems.

 

1.2   STATEMENT OF PROBLEMS

The main purpose of setting up a private firm is to achieve enough sales revenue that will cover the fixed and the variable cost as well as leave some profit to justify its existence. Nigeria brewery limited being a private enterprises involve a brewery beer that has the objective of making big, huge profit. Brewery all over Nigeria witness heavy return on their investment due to the quality of the product to neighbouring African countries as well as the high consumption rate of beer in the country. This was before the year 1982.

The introduction of many economic measure of after the year 1982 aim at revamping the nations live economy brought with many problems with which the brewery industries is not left out. In order to produce, firms in the brewery industry (including the Nigerian breweries limited) acquires fixed asset as well as raw material. This acquisition is based on the expected demand. The demand for beer cannot now be fairly estimated because of the general rises in the price. General rises in the price of beer has made the consumer to shift their demand to other goods as necessity thud decreasing the demand for beer. The uncertainty surround the continuance of that rate of which the demand for beer decrease has become of a problem encountered by the capital budgeted especially by the Nigerian breweries limited since the capacity of production is always affected by change in demand of the product.

Apart from the capital budgeting, problem caused by the uncertainty is the change in demand, there is also a problem of tariff and import restriction on the importation of fixed asset and the spare parts.

The singular problem has helped in no small measure in fuelling the height of the problem encountered by the firm. It has also made firm like the Nigerian breweries look for alternative way of obtaining fixed asset necessary for its production and operation. Even when this fixed asset are sources from them it often increase the price for them as a result of the impact tariff restriction. The uncertainty surrounding this has made a capital budget problem increase in price for fixed asset as a result for import restriction and the small nature of the financial capacity had made firms like the Nigerian breweries limited to rank the project they wish to embark on. In encountered in the selection of the project of the human problem in the organization, which is to be embarked upon. There is always problems of appropriate selection that will be peculiar to a given project. As encountered, the project of selecting the human factors, which is fidelity of the state of mind of the individual in charge of the capital budgeting. Because o the small nature of the financial ability. Nigerian breweries limited took to external source of financing in its capital project. The external source of financing include the commercial bank, trade creditors, and some financial institution charges interest on the money that they lend out.

Interest charges fluctuated with the changes in the economic setting. Due to the dynamic nature of the economy with consequent effect on the interest rate, it is the problem making last benefit analysis necessary in the capital budgeting.

Even when the able problem are solved to a great extent, there remains the problem of obtaining foreign exchange necessary to remits the exporters change rate. The rate is never stable. The uncertainty include in the makes a problems for capital budgeting.

 

1.3   RESEARCH QUESTIONS

To achieve the objectives of the study, the researcher would seek to provide answers to the following questions:

1. Do your company make capital budgeting?
2. Does the capital budgeting influence the achievement of your company’s objectives?
3. Is the influence favourable?
4. Does the management of your company evaluate capital project?
5. Is the evaluation of capital project a very important issue in your company?
6. Do the management makes capital budgeting solely on the basis of evaluation result?
7. How will you assess the evaluation techniques of your company?

 

1.4   PURPOSE OF THE STUDY

The purpose of the study were to find out the following;

1. To ascertain the extent to which capital evaluation techniques are used by the Nigerian breweries management in evaluating their project.
2. To ascertain whether well evaluated project will yield the adequate return for the investor.
3. To determine the other factor which influence the selecting of the project to be invested in.
4. The capacity of the budgeting process in the Nigeria brewery limited.

 

1.5   SIGNIFICANCE OF THE STUDY

A lot of factor makes capital budgeting very important in the production and the commercial far of any economy. This factor include loss of flexibility, some of the information on this were taken form essential of managerial finance by J.F Weston and E.F Brigham (1998) 253: after the commitment of the fund to project, the relationship between asset expansion and sale proper phasing the availability for the capital asset and the quality of the asset purchased, satanically expenditure on which fund are not automatically available and the failure of a firm as a result of too little equipment.

Capital budget is an impact aspect of strategic decision involving the financial management in the purchase of the fixed asset, firms commit large amount of capital. The result of this capital commitment continue over a long time with subsequent loss of flexibility in decision making. Apart from loss of flexibility in the long age to event, expansion of the fixed assets is always related to future sale and future are also forecast.

Acquisition of an asset with a five year economic live span means a forecast accurately result in the under investment of the fixed asset.

The outcome of the research work will be significant to the management of the Nigerian breweries limited who is faced with capital budgeting decision problem.

Furthermore, it will be significant to the investor who which to invest in capital project.

Finally it will be equally be important to other researcher and scholar who wish to carry out further researchers on the subject matter or on the related topic.

 

1.6   SCOPE OF THE STUDY

The study will examine the capital budgeting techniques of the Nigerian breweries and will be able to established if there is any relationship between the budgeting techniques adopted by the firm which is stated in the theory.

 

1.7   LIMITATION OF THE STUDY

Limitation abounds in this type of study. So far the limitation encountered are as follows:

ACCESS TO THE DOCUMENTS: Experience has shown that apart form carrying out academic research in firm, it is also difficult to gain access to the document. This is because that firm has certain secrets commits to written which they will not like any other person to see. This was considered impediment to this study.

TIME CONSTRAINT: Unlimited study on defilement assess for interest would have been conducted through out the world if there were enough time for that.

Time constraint was the most inhibiting factor which other wise world have enable and extensive pursuit of knowledge in this area of interest is capital budgeting.

INSUFFICIENT INFORMATION: The research conducted interviews in attempt to try to see some of the documents. Document wanted were no obtained because of the interviewer fear for letting out the companies secrets. Some oral information was difficult to get.

LACK OF FINANCE: Also this constitutes problems to this study. If there is enough capital to spend in transport and fact findings and borrowing of necessary literature that would have helped in the writing of this research work.

 

1.8   DEFINITION OF TERMS

CAPITAL BUDGETING: This is a long-term plan made form expenditure necessary to buy fixed assets from the production of goods and services.

FINANCE: This is the terms used to donate the acquisition and expending of funds to meet an economic unit objective.

CASH FLOWS: This simply means a flow of cash into a firm such as revenue of sale.

CAPITAL ASSET: This is asset of long-term nature used in the production of goods.

CAPITAL RATIONING: This is the allocation of scarce capital resources among competing economically desirable project which cannot be carried out to capital or other constraint.

BANKING: this is the arranging of project in eh order of the their validity with reference to their evaluation results.

FORECAST: This is a statement about what will happen in the future, based on information that is available now.

REVENUE: This means benefit derived from some things for one year for immediate cash.

CASH BUDGET: It is a budget prepared to show summary form / the expected cash receipts and expected cash payments during the budget period.

CAPITAL EXPENDITURE: This means using something that last for more than one year.

 

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THE NATURE AND CONSEQUENCES OF JUVENILE DELINQUENCY IN NIGERIA: A STUDY OF ENUGU NORTH LGA, ENUGU STATE

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WE HAVE SECURITY IN OUR BUSINESS.   

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CAPITAL BUDGETING IN THE PRIVATE SECTOR (A CASE STUDY OF THE NIGERIAN BREWERIES)

 

ABSTRACT

Capital budgeting involve basically the estimation of the cash flow, estimation of the expected cash return and application of evaluation techniques in making investment decision.

This study looked into the extent to which the Nigerian breweries do carry out proper evaluation of capital project before making their investment decision as well as the extent in which other factors are consider in the decision process.

The study wills assertion the extent to which capital budgeting evaluation techniques are used by the Nigerian breweries in evaluation the capital budgeted projects. And consider whether well-evaluated project will yield adequate return for investors as well as the other factor, which influence the selection of the project to be invested in.

In arriving at my conclusion, interview were conducted and statistical test such as the chi-square were used in analyzing data collected at the course of the study.

Result of the study show that the evaluation of the capital project by the management of the Nigerian breweries is not normally carried out effectively before making their investment decision and that a well evaluated project will normally yield an adequate return on investment.

Based on the findings, some recommendation has been put forward for consideration in chapter five.

CHAPTER ONE:

1.1 Introductions

1.2 Statement of the problem

1.3 Objective of study

1.4 Significance of study

1.5 Statement of the hypothesis

1.6 Scope of the study

1.8 Definitions of terms

CHAPTER TWO:

2.0     Review of the related literature

2.1     Meaning of capital budgeting decision

2.2     Importance of capital budgeting decision

2.3     Types of capital budgeting decision

2.4     Problems

2.5     Analysis of capital project

2.6     Deterring the cash flow

2.7     Techniques used in capital budgeting decision

2.7.1  Payback method

2.7.2 Net present value

2.7.3 Internal rate of return

2.7.4 Accounting rate of return

• Ranking of investment proposal

CHAPTER THREE

3.1     Research design and methodology

3.2     Source of data

3.3     Primary

3.4     Secondary data

3.5     Sample used

3.6     Method of investigation

CHAPTER FOUR

4.1     Data analysis and interpretation

4.2     Data presentation and analysis

4.3     Test of hypothesis

CHAPTER FIVE

SUMMARY, FINDINGS, CONCLUSION AND RECOMMENDATION

5.1     Summary of the findings

5.2     Conclusion

5.3     Recommendation

BIBLIOGRAPHY

APPENDIX / QUESTIONNAIRE

 

CHAPTER ONE

 

INTRODUCTION

Every business firm normally will like to know how it perform over a period of time thus leading to a preparation of profit and loss statement. They also ask about their position at a particular point in time, which lead then to proper balance sheet. Finally they will like to know where they are leading which led to the preparation of budget.

Budgeting is a term that used by long man. Long confused budgeting with planning. a beget is part of a plan. A plan can be expressed in monetary and non-monetary terms. Any plan that is qualified in a monetary term is a budget . a bugeti therefore can be succinctly define as a statement of intention qualified in monetary terms.

In budgeting there are types of budget prepared by frims . such budget include capital budget, sale budget, cash budget and so on. The process of preparing capital budget is called budgeting. Capital budget are long-term budget made for acquisition and expansion of fixed asset. Many firms prepares capital budget today. It was originated in the united state of America (U.S.A) in America it was applied by all firm before the second war. After the second war, many firm saw the need to plan for capital expenditure, hence it is prevalence today.

The Nigerian brewery limited and other beverage are not left out in the train of firm of firm that prepare budget for its capital expenditure. This is however not easy as it is fought with a lot of problem.

 

STATEMENT OF PROBLEM

The main purpose of setting up a private firm is o archive enough sale revenue that will cover the fixed and the variable cost as well as live some profit top justify its existence. Nigerian brewery limited being a private enterprise involves a brewery beer has the objective of making big huge profit. Brewery all over Nigeria witness heavy rerun on their investment due to the expert of their product to neighboring African countries as well as the high consumption rate of beer in the country. This was before the year 1982.

The introduction of many stringent economic measure after the year 1982 aim at revamping the nations live economic brought with many problem with which the brewery industries is not left out. In the order to produce, firm in the brewery industry (* including the Nigerian brewery limited) acquire fixed asset as well as raw material. This acquisition is abased on the expected demand. The demand for beer cannot now be fairly estimated because of the general rises in the price. General rise in the price of beer has made the consumers to shift their demand to other goods as necessity thud decreasing the demand for beer. The uncertainty surrounding the continuance the rate at which the demand for beer decrease has become of the problem encountered by the capital budget especially by the Nigerian breweries limited since the capacity of production is always affected by change in the demand of the product.

Apart form the capital budgeting problem caused by the uncertainty in the change in the demand, there is also a problem of tariff and import restriction on the importation of fixed asset and the spar parts. The singular problem has help in no small measure in fuelling the height of the problem encountered by the firm. It has also made from like the Nigerian breweries look for alternative way of obtaining fixed asset necessary for its production and operation. Even when this fixed asset are source from the , it often increased the price for them as a result of the import tariff restriction,. The uncertainty surrounding this has made a ca0tial budget problem.

Increase in price for fixed asset as a result for import restriction and the small nature of the financial capacity had made firm like the Nigerian breweries limited t rank the project hey wish to embark on. . In encountered in the selection of the project of the human problem in the organization, which is to be embark upon. There is always problem of appropriate selection that will be peculiar to a given project. As encountered in the project is the selection of human factor, which is fidelity of the state of mind of the individual in charge of the capital budgeting. Because of the small nature of the financial ability. Nigerian brewery limited took to external source of financing in its capital project. The external source of financing include the commercial bank, trade creditors. And some financial institution. Bank and other financial institution charges interest on the money that they lend out. Interest changes fluctuated with the changes in the economic settings. Due to the dynamic nature of he economy with consequent affect on the interest rate, it is problem making cost benefit analysis necessary in the capital budgeting.

Even when the able problem are solved to a great extent their remain the problem obtaining foreign exchange necessary to remit the exporters change rate. The rate is never stable. The uncertainty included in this makes a problem for capital budgeting.

 

PURPOSE OF THE STUDY

The purpose of the study were to find out the following

1. Ascertain the extent to which capital evaluation techniques are used by the Nigerian breweries management in evaluating their projects
2. Ascertain whether well evaluated project will yield the adequate return for the investor
3. Determine the other factor, which influence the selecting of project to be invested in.
4. The capacity of the budgeting process in the Nigerian brewery limited

 

SIGNIFICANCE OF THE STUDY

A lot of factor makes capital budgeting very important in the productive and the commercial fair of any economy. This factor include lose of flexibility. Some of the information on this were taken form essential of management finance by J.C Wilson and E.A Brighton. After the commitment of fund to project, the relationship between asset expansion and sale proper phasing the availability for the capital asset and the quality of the asset purchased, satanically expenditure on which fund are not automatically available and the failure of a firm as a result of too little equipment.

Capital budget is an important aspect of strategic decision involving the financial management in the purchase of the fixed asset, firms commit large amount of capital.. The result of his capital commitment continue over a long time with subsequent lose of flexibility in decision-making. Apart from lose of flexibility in the long age to event, expansion of the fixed asset is always related to the future sale and future sale are also forecast. Acquisition of the an asset with a five year economic live span means a forecast of sale to be made over the same period of time. Therefore, failure to forecast accurately result in the under-investment of the fixed asset.

The outcome of the research work will be significant to the management of the Nigerian breweries limited who is faced with capital budgeting decision problem.

Furthermore, it will be significant to the investor who which to invest in capital project.

Finally it will be equally be important to other researchers and scholars who may wish to carry out further research on the subject matter or on the related topic.

 

STATEMENT OF HYPOTHESIS

Ho: that evaluation techniques used by the company management is adequate for good decision-making

Hi: that the evaluation techniques used by the company are not adequate fir good decision making

 

Ho: the evaluation the capital project in not important in the Nigerian breweries

Hi: the evaluation of a capital project is not important in the Nigerian breweries.

 

 

SCOPE OF THE STUDY

The study will examine the capital budgeting techniques of the Nigerian breweries and will be able to established if there is any relationship between the budgeting techniques adopted by the firm with stated in the theory

 

LIMITATION OF THE STUDY

Limitation abounds in this type of study. So far the limitation encountered are as follows

Access to the documents: experience has shown that apart from carrying out academic research in firm, it is also difficult to gain access to the document. This is because that firm has certain secrets commits to written which they will not like any other person to see. This was considered impediment to this study

Time constraint: unlimited study on defilement areas for interest would have been conducted throughout the world if there were enough time for that. Time constraint was the most inhibiting factor which otherwise would have enable and extensive pursuit of knowledge in this area of interest in capital budgeting

Insufficient information:

The researcher conducted interview in attempt to try to see some of the document. Document wanted were not obtained because of the interviewer fear for letting out the companies secret. Some oral information was difficult to get.

 

DEFINITION OF TERM

Capital budgeting: This is a long-term plan made for expenditure necessary to buy fixed asset for the production of the good and service

Finance: This is the term used to donate the acquisition and expending of fund to meet an economic unit objective

 

Cash flow: This simply means a flow of cash into a firm such as revenue from sale

 

Capital asset: This is asset of long-term nature used in the production of goods

 

Capital rationing: This is the allocation of scarce capital resources among competing economically desirable projects, which cannot be carried out to capital or other constraint

 

Ranking: This is the arranging of project in the order of their viability with reference to their evaluation result.

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THE NATURE AND CONSEQUENCES OF JUVENILE DELINQUENCY IN NIGERIA: A STUDY OF ENUGU NORTH LGA, ENUGU STATE

Foreign Transaction For Dollars Payment :
Bank Name: GTBank
Branch Location: Enugu State,Nigeria.
Account Name: Chi E-Concept Int’l
 Account Number:  0117780667. 
Swift Code: GTBINGLA 
Dollar conversion rate for Naira is 175 per dollar. 

ATM CARD:  YOU CAN ALSO MAKE PAYMENT USING YOUR ATM CARD OR ONLINE TRANSFER. PLEASE CONTACT YOUR BANK SECURITY FOR GUIDE ON HOW TO TRANSFER MONEY TO OTHER BANKS USING YOUR ATM CARD. ATM CARD OR ONLINE BANK TRANSFER IS FASTER FOR QUICK DELIVERY TO YOUR EMAIL . OUR MARKETER WILL RESPOND TO YOU ANY TIME OF THE DAY. WE SUPPORT CBN CASHLESS SOCIETY. 

OR
PAY ONLINE USING YOUR ATM CARD. IT IS SECURED AND RELIABLE.

form>DELIVERY PERIOD FOR BANK PAYMENT IS  LESS THAN 24 HOURS

CALL OUR  CUSTOMERS CARE  OKEKE CHIDI C ON :  08074466939,08063386834.

AFTER PAYMENT SEND YOUR PAYMENT DETAILS TO

08074466939 or 08063386834, YOUR PROJECT TITLE  YOU WANT US TO SEND TO YOU, AMOUNT PAID, DEPOSITOR NAME, UR EMAIL ADDRESS,PAYMENT DATE. YOU WILL RECEIVE YOUR MATERIAL IN LESS THAN 2 HOURS ONCE WILL CONFIRM YOUR PAYMENT.

WE HAVE SECURITY IN OUR BUSINESS.   

MONEY BACK GUARANTEE

CAPITAL BUDGETING IN A PRIVATE SECTOR (A CASE STUDY OF NIGERIAN BREWERIES)

PREFACE

The main objective o this research work is to develop systematically the beginning of and various stages in capital budgeting.

Indeed, the aim is to provide an integrated presentation of capital budgeting and to view the unity of the subject matter in such a way that the questions of “how” and “why” are easily answered.

The topics, sales forecasting (touched briefly) and forecasting of financial requirements as they relate to capital budgeting are covered. The other section of this research work include literature review, research methodology, case study and analysis of data and summary of findings recommendation and conclusion.

The section in literature review is quite extensive when compared to other sections of this research work. it is the intention of the researcher to bring out the essentials that relate to capital budgeting and hint on those that relate to the company under study. It is hope that those that do not elate to the company will find it useful, to students with interest in capital budgeting and who capital budgeting and who carryout their research work on their companies in Nigeria and aboard.

This research work is written in language that will make it easy for many people to read and understand. It is my hope that it will enhance the attractiveness of capital budgeting for a large number of audience.

CHAPTER ONE

Introduction

• Problem statement 2
• Hypothesis 6
• Limitations of study 8
• Significance of study 9
• Definition of terms 12

CHAPTER TWO

Literature review

• Ranking investment proposal 14
• Post auditing of the investment decision 17
• Analysis of capital projects 19
• Capital rationing                    35

 

CHAPTER THREE

Research methodology and designation

• Sources of data                                                  55

CHAPTER FOUR

Case study and analysis of data and presentation

• Profile of Diamond breweries limited 61
• Organisational structure with special –

 

CHAPTER FIVE

Summary of findings, recommendation and conclusion

• Summary of findings 75
• Recommendations                                              78
• Conclusion 80

BIBLIOGRAPHY                                                          81

INTERVIEW QUESTIONS                                 83

APPENDIX

 

CHAPTER ONE

INTRODUCTION

Every business firm normally will like to know how it performed over a period of times, thus leading to the preparation of profit and loss statement. They also ask about their position at a particular point in time which leads them to prepare balance sheet. Finally, they will like to know where they are heading, which has led to the preparation of budgets.

Budget is term used locally by a lay man. Lay man confuse budgeting with planning. A budget is part of a plan. A plan can be expressed in monetary and non-monetary term. Any plan that is qualified in monetary term is a budget. A budget, therefore, can be succulently defined as a statement of intention qualified in monetary term.

In budgeting there are types of budget prepared by firms. Such budgets includes capital budgets, cash budgets, sales budget and so on.

The process of preparing capital budget is called capital budgeting. Capital budgets are long term budgets made for acquisition and expansion of fixed assets. Capital budgets are prepared by many films today. It was originated in the United States of America (USA). In America it was applied by firms before the second world war.

After the second world war many firms saw the need to plan for capital expenditure, hence it is prevalence today.

Nigerian breweries limited, Monarch larger beer and other beverages, are not left out in the train of firms which prepare budgets for its capital expenditure. this is, however, not easy as it is fraught with a lot of problems.

 

• PROBLEMS STATEMENT

The main purpose of setting up a private firm is to achieve enough sales revenue that will cover fixed and variable costs as well as leave out enough profit to justify its existence.

Nigerian breweries limited being a private enterprise involved in brewing beer has the objective of making huge profits.

Brewers all over Nigeria witness heavy returns on their investments due to export of their products to neighboring African countries as well as the high consumption rte of beer in the country. This was before the year 1982.

The introduction of many stringent economic measures after the year 1982, aimed at revamping the nations ailing economy, brought with its many problems of which the brewing industry is not left out.

In order to produce, firms in the breweries industry (including Nigerian breweries limited) acquires fixed assets as well as raw materials.

These acquisitions are based one expect demand. The demand for beer cannot now be fairly estimated because of the general rise in prices. General rise has made consumers of beer shift their demand to other goods of necessity thus leading to decrease in demand for beer. The uncertainly surrounding the continuance and rate of which demand for beer decrease has become one of the problems encountered in capital budgeting, especially by Nigerian breweries limited, since capacity to produce is always affected by changes in demand.

Apart from capital budgeting problems caused by uncertainty in demands there is also the problem of tariff or import restrictions on the importation of fixed assets and spare parts. This singular problem has helped in no small measure in fuelling the amber of problems encountered by these firms. It has made firms like Nigerian breweries limited search for alternative sources of obtaining fixed assets necessary for its production operations. Even when these fixed assets are source, there is often an increase in the price paid for them as a result of import tariffs or restrictions. The uncertainly surrounding this has made it a capital budgeting problem.

Increase in price of fixed assets as a result of import restrictions and the small nature of the financial capability have made firms like Nigerian breweries limited to rank the projects they wish to embark upon. There is always the problems of appropriate method of selection that will be peculiar to a given project. Also encountered in the selection of projects is human problem in the organisation which is a function of the state of mind of the individual in charge of the capital budgeting.

Because of the small nature of its financial ability Nigerian breweries limited look for external means of financing its capital projects. These external sources of finance include commercial banks, trade creditors and some financial institutions. Banks and other financial institutions charge interest on the money they lend out. interest charges are based on negotiations or what prevails in the banking industry as directed by the Central Bank of Nigeria. interest charges fluctuates widely with the economic condition. Due to the dynamic nature of the economy and consequent effect on interest rate, it is a problem making cost benefit analysis necessary in capital budgeting.

Even when the above problems are solved to a great extent, there remains the problem of obtaining foreign exchange necessary to remit to exporters exchange rates are never stable. The uncertainty include in this makes it a problem in capital budgeting.

These problems were what gave rise to the research objectives.

 

1.3     OBJECTIVES OF THE STUDY

The objectives of this study were to find out the following:-

1. Factors responsible for the demand for beer and the effect demand has on capital budgeting, other operations of the company and its existence.
2. The capital budgeting process in Nigerian breweries limited
3. Why external sources of finance is used instead of floating stock of shares given its financial constraints and high interest rate on external financing.
4. Ways in which purchased capital assets are paid for (example, through letters of credit, documentary bills for collection, open transfers etc).
5. The effects delaying arrival of ordered assets or pays for them have on the production of beer.
6. The effects over or under – investment have on the firm.
7. How they forecast sales or demand given its fluctuation as a result of general rise in prices.

In connection with the above objectives was the necessity to formulate hypothesis.

 

1.4     HYPOTHESIS

The following hypothesis were formulated with respect to this study. In other words the following were tested.

1. i) Fluctuations in demand has no effect on capital budgeting and other operations of the firm.
2. ii) There are no problems in the capital budgeting of Nigeria breweries limited.

iii)     The company does not seek floatation of stock in the stock exchange because it does not want external in both its operations and management.

1. iv) There is no problem encountered so far as the method used for payment of capital assets purchased.
2. v) Delays in arrival of ordered fixed assets have no effect on the production of beer.
3. vi) Over-or under-investment in fixed assets has little or no effect on the financial position of the company.

These hypothesis were what the researcher examined in the course of this investigation of capital budgeting in Nigeria breweries limited.

Academic enquiry on capital budgeting is not without limitations.

 

 

• LIMITATIONS OF THE STUDY

Limitations abound in this type of study. So far the limitations experienced are as follows;

 

 

Access to documents

Experience has shown that apart from carrying out a research academic studies in firms, it is always difficult to gain access to documents. This is because firms have certain secret committed to writing which they will not like any person to see. This was a considered impediment on this study. Another impediment was time constraints.      

Time constraint

Unlimited studies on different areas of interest would have been conducted throughout the world if for time constraint amongst others.

In this study, time constraint was the most inhibiting factor which otherwise would have enable an extensive pursuit of knowledge in this area of interest – capital budgeting.

Apart from time constraint, there was the problem of getting sufficient information.

1.5.3           Insufficient Information        

Interview was conducted by the researcher in addition to trying to see some documents. Documents wanted were not obtained because of interviewer’s fear of letting out company secrets. Some oral information was also difficult to get.

In spite of the limitations mentioned above, the study of capital budgeting has a lot of significance.

 

1.6     SIGNIFICANCE OF STUDY

A lot of factors make capital budgeting very important in productive and commercial spheres of any economy. These factors include’ loss of flexibility.

Some of the information on this were taken from “essentials of management finance” by J. F. Weston and E. F. Brigham after commitment of funds to projects, the relationship between asset expansion and sales, proper phasing of the availability of capital assets and the quality of assets purchased, substantial expenditures which funds are not often automatically available and failure of firms as a result of the little equipment.

Capital budgeting is an important aspect of strategic decision involving financial management. In purchasing fixed assets, firms commit large amount of capital. The result of this capital commitment continue over a long time with subsequently loss of flexibility in decision making.

For example firm ABC limited commits funds on equipment X with an economic life of six years. The expenditure takes a long time before starting to yield good fruits and during which the firms is held hostage to future events both in technological developments in the general economy.

Apart from loss of flexibility and hostage to future events, expansion of fixed assets are always related to future sales, future sales are always forecast. Acquisition of an asset with a fire year economic life means a forecast of sales to be made over the same period of time.

Therefore, failure to forecast accurately results in over or under investment in fixed assets.

Over investment in fixed assets often lead to unnecessary heavy investment, when fund the firm should have employed profitably in other income yielding ventures such as securities. It is often difficult for a firm to forecast its optimum investment accurately with the result that there is another extreme of investment in fixed assets which may lead to enable it complete very well with rivals in the production of goods. A firm can also lose a portion of its share of the market as a result of inadequate capacity or under investment. To regain the profit of its share of the market lost often involves huge expenses in selling and sometimes reduction in selling price or both.

Availability of capital asset if properly phased helps the firm to buy equipment necessary to take care of intermittent spurts in demand for its production. This is so in that an increase in demand in excess of firms. Capacity often leads to turning away of orders. Excessive demand and pressure on firms make them rent additional equipment and buildings in order to produce goods that will meet the mounting demand. On getting these facilities ready, firms discover that demand for their products have leveled off and not as before.

Capital budgeting for asset expansion is also significance in that it involves a substantial outlay of funds. This makes it necessary for a firm to plan how to raise the needed funds as they are not always automatically available in order to be sure of funds when its expansion is embarked upon.

Finally, most firms which failed did so not because of over investment but because they had too little capital equipment. their failure is as a result of rival companies installing automated and more efficient equipment capable of producing a higher quantity of the goods currently produced. Also these goods are produced at a relatively shorter time at reduced price. Having stated the significance of this study of capital budgeting, the researcher found it important to define some words or terms used which she felt would make the understanding of this study easy for its readers.

 

• DEFINITION OF TERMS

1. Capital budgeting; this is a long-term plan made for expenditures necessary to buy fixed assets for production of goods.
2. ii) Finance; This is a term used to denote the acquisition and expending of funds to meet an economic units objectives.

iii) Cash-inflow; It is used to means flow of cash into a firm such as revenue from sales.

1. iv) Capital assets; They are assets of long term nature used in the production of goods.
2. v) Outlay of funds; Expending of money, Terms were defined in order to make readers understand the subject under discussion.

Knowledge is cumulative and text books already write on the subject serve as a precedent for the work. it was in purist of more knowledge in capital budgeting that the researcher reviewed literatures written by several authors on the subject.

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BUSINESS FAILURE AND THEN ACCOUNTING PROFESSION IN NIGERIA

ABSTRACT

The Nigeria economy with the first half of the century experienced quite a lot business failure. Business failure can be defined as the inability of a particular business enterprise to continue to function as a ‘ going concern’’. This development has started generating anxiety by both international and local investors in arriving at investment decision.

 

However, the task of identifying the root causes of corporate collapse is what this study seeks after. This study is carried out at ensuring a survival dosage of business in post- Harcourt through the use of accounting profession (auditing) to appraise operational performance.

Some of the causes of business failure include mismanagement Bribery and corruption, and poor remuneration etc. the brain behind the failure of business in the political undertone in the management positions.

Based on the findings in the study, the following conclusion were dawn, mismanagement, mode of appointment and selection of key officer, poor co-ordinates management device, government inference, and privatization and commercialization programme.

Finally, it is recommended that business should appreciated the importance of audit as a tool evaluating performance, appointment of board of directors and top management officers should be based on skill, should also institute its commercialization and privatization programme in place etc.

CHAPTER ONE

INTRODUCTION

• OBJECTIVE OF THE STUDY
• STATEMENT OF PROBLEM
• STATE OF HYPOTHESIS
• SIGNIFICANCE OF THE STUDY
• SCOPE OF THE STUDY
• LIMITATION OF THE STUDY
• DEFINITION OF TERMS

 

CHAPTER TWO

REVIEW OF RELATED LITERATURE

• INTRODUCTION
• THE GOING CONCERN OF BUSINESS
  • DEFINITION OF BUSINESS
  • FORMS OF BUSINESS
  • IMPORTANCE OF BUSINESS
  • WHEN A BUSINESS IS NOT GOING CONCERN
  • WHEN A BUSINESS MAY NOT BE A GIONG CONCERN
• SYMTOPMS OF IMMINENT BUSINESS FAILURES
• NATURE AND CAUSES OF BUSINESS FAILURES
• THE DEVELOPMENT OF ACCOUNTIGN PROFESSION

(AUDITING).

• DEFINITION OF AUDITING
• TYPES OF AUDIT
• THE AUDITOR AND TH DANGER OF SELF FULFILMENT PROPHESY
• IMPORTANCE OF AUDITING
• THE AUDIT COMMITTEES
  • NATURE OF AUDIUT COMMITTEES
  • COMPOSITION OF AUDIT COMMITTESS
  • FUNCTIONS OF AUDIT COMMITTEES
  • QUALIFICATION OF AUDIT COMMITTEES
  • SIZE OF AUIT COMMITTEES
  • AUDIT COMMITTEES RELATIONSHIP WITH AUDIOR
• THE EFFECT OF BUSINESS FAILURES ON A DEPRESSED ECONOMY.

 

CHAPTER THREE

RESEARCH DEISGN AND METHODOLOGY

• INTRODUCTION
• RESEARCH DESIGN
• SAMPLNG TECHNIQUES
• QUESTIONNAIRES DESIGN
• DATA COLLECTION TECHNIQUES

 

CHAPTER FOUR

PESENTATION OF DATA ANALYSIS

4.1     DATA PRESENTATION AND   ANALYSIS

• TEST OF HYPOTHESIS

 

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMENDATION

• SUMMARY OF FINDINGS
• CONCLUSION
• RECOMMENDATION (S)
• SUGGESTION FOR FURTHER STUDIES

BIBLIOGRAPHY

APPENDIX: QUESTIONNAIRE

 

 

CHAPTER ONE

 

1.0       INTRODUCTION

The Nigeria economy within the half of this century experienced quite a lot of business failures. There was a rapid growth in the number of indigenous companies collapsed with the same rapidity with which they were established. Business failures are actually one of the most difficult and complex concern faced by investors in the equity market or the stock exchange market in the recent time. Even with the best of strategic co-operate planning, business   failure are still a common occurrence. Business failure can be defined as the inability of a particular business enterprise to continue to function as a going concern. The going concern concept presumed that an enterprise will continue in operation for the foreseeable  future, and that there is neither the necessity nor the intention to liquidate.

In general, it was gathered that some of the causes of business failure includes.

1. Lack of capital (inadequate capitalization)
2. Inefficient management
3. Poor remuneration packages
4. Inadequate accounting records
5. Un-adequate accounting records
6. Lack of feasibility study report
7. Fraud

Given the devastating effect of business ailments, it because  necessary to undertake a research, into the problem and failure of business life as well as making suggestion on ways of ameliorating their adverse effects.

According profession (Auditing) is one of the effective tool of evaluating and predicting business failure. Auditing is a process (carried out by suitable qualified auditing). Where by the accounts of business entities including limited companies, characterize,  trusts and professional firms, are subject to scrutiny in such details as to their truth and fairness.

So many parties such as creditors, investors, owners, the firm itself and the government etc are interested with the present and expected future earning and the stability of these  earning, and financial business as a going concern, therefore, they need Accounting profession to evaluate and compare the profitability as well as to predict the survival of the business.

Therefore, this study seeks to use statistical tools appraise and predict corporate failure with the aim of putting into place an integrated framework on the subject.

 

• OBJECTIVE OF THE STUDY

It has been argued in recent times that the monetary value of corporate failure is of   colossal notation, which could foster economic growth. Therefore the following are the main aim of this study;

1. To know why business are failing?
2. Investigate whether government policies and actions effects operational performance.
3. Do business rely on Accounting profession (Auditing) as tools for their performance?
4. Identify and analyze strategic corporate plans adopted by business.
5. Assess the remedial dosage of companies to respond to corporate objective.

 

• STATEMENT OF PROBLEM

Problem is a phenomenon occurring in most, if not all area of human endeovor. The existence of problem cal for the finding of solution aimed of obviating such problem. The seriousness and urgency of solutions to problems are largely depended on the threat posed by the problems. However, some problems appear to defy certain worked out solution to them. Such a situation demands a close examination of the issues;

1. Why is business failure on the increase in Port Harcourt?
2. Why do auditors qualify their report when such concerns are failing?
3. How effective are Accounting profession they use the measurement of their business?
4. To what extent has his failure affected the economy?

 

• STATEMENT OF HYPOTHESIS

(HO) NULL HYPOTHESIS

1. The rate of business failure has been reduced by professional accountants.
2. (Hi) ALTERNATIVE HYPOTHESIS

The rate of business failure has not been reduced by professional accountants.

 

• SIGNIFICANT

Obviously candidates who are undertaking a study of business failures are likely to encounter similar problems.

Accordingly, this study examines business failure in companies, identifying problems and sating visible suggestion that will  be useful to corporate bodies any establishment with survival strategic a period of economic depression. The potential investors will also find work a useful guide.

A part from the research workers, government agencies will also benefit immensely from this study.

 

• SCOPE OF THE STUDY

This study covered some business port Harcourt. The period of the study covered the last five years and above in the life of some business in Port Harcourt. However, this does not preclude inquiries on the initial capital outlay, the labour strength internal control measures etc.

 

• LIMITATION OF THE STUDY

The scope and depth of this study would have been boarder but for certain constraints such as:

1. Time constraints.
2. Financial constraints
3. Unwillingness of some officers to divulge information to research effort etc.

However, care and caution were  taken an generalizing the study particular registered business.

 

• DEFINITION OF TERMS

1. BUSINESS FAILURE:

Lack of business success or sudden end of a business performance.

2. CORPORATE COLLAPSE:

A failing of a corporate when the component part fail to provide support

3. REMUNERATION:

To pay money or make a gift to some one in return for his services.

4. ENTERPRISE:

A venture and the character needed for such a venture.

5. AMELIORATING:

Improving a given condition of problem.

6. ACCOUNTIGN PROFESSION:

The profession that trains accountant into the act of book-keeping and financial reporting.

7. COLOSSAL:

Big in size and degree

8. DIVULGE:

To make known and reveal a fact.

9. HYPOTHESIS:

An idea or preposition not derived from experience but formed and used to explain certain facts to provide the foundation of an argument.

(A CASE STUDY OF SELECTED BUSINESS IN PORT-HARCOURT)

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AUDITING AS A CONTROL IN PUBLIC SECTOR ACCOUNTING

(A CASE STUDY OF FEDERAL MINISTRY OF FINANCE ENUGU)

Chapter one   

• Introduction

1.1     Background

• Statement of problems
• Purpose of the study
• Scope pf the study
• Research questions
• Null hypothesis
• Significance of the study

Chapter two 

• Review of related literature

2.1     History of auditing as a profession

• Legal framework of public sector auditing
• Auditing and corruption in Nigeria
• Auditing and fraud detection in government institutions
• Internal auditing in government agencies
• Compliance and efficiency auditing in the public sector
• Relevance of auditing standards in the public sector.
• Auditing and internal control in the public sector.
• Summary or related reviewed literature

 

Chapter three

• Research methodology

3.1     Design of the study

• Area of the study
• Population of the study
• Sample and sampling procedure
• Instrument for data collection
• Validation of the instrument
• Reliability of the instrument
• Administration of the instrument
• Method of data analysis

Chapter four

• Data presentation and result

4.1     Summary of result

Chapter five

• Discussion of result
• Conclusion
• Implication of the research findings
• Recommendation
• Suggestion for further study
• Limitation of the study

References

Appendixes

LIST OF TABLES

4.1     Reception of senior and junior staff of federal ministry of   finance Enugu on the extent auditors role promote transparency accountability deter waste and encourage good government in the ministry.

4.ii.    T- test analysis of the difference between the mean perception scores of the staff of federal ministry of finance Enugu

4.iii    Perception of senior and junior staff of federal ministry of finance Enugu on the extent professional ethics and auditing standards  were applied by the auditors in the ministry.

4.iv    T- test analysis of the difference between the view scores of the staff of federal ministry of finance Enugu

4.v     Perception of senior and junior staff of the federal ministry of finance Enugu on the extent Bribery and  corruption has reduced the efficiency and proficiency of public sector in servicing its control purpose in the ministry

4.vi    T- test analysis of difference in perception of senior and junior staff on causes of audit failure in the federal ministry of finance Enugu

4vii    Views of senior and junior staff of federal ministry of finance Enugu on the interference of nepotism, faviour and political affiliation in the appointment and removal  of auditors in the federal ministry of finance Enugu.

4vii    T- test analysis of difference in perception of senior and junior staff on the interplay of nepotism favoritism and political affiliation in the appointment and removal of auditor in the ministry

 

ABSTRACT

This work border on the auditing as a control in public sector accounting   a case study of federal ministry of finance Enugu. Its main theme is the purpose auditing serve in the public sector as a control for all financial accountability and otherwise in the public sector. Importance of the study was to help the financial controllers of government agencies understand that auditing of public sector is as more important as that of the private sector. The area of the study was federal ministry of finance Enugu.

This study is divided into five chapter, chapter one gives the general introduction about the reason why the work was embarked upon. Chapter two report the views of other authors that have conducted work  relevant to the theme of the study. Chapter three described the actual process and methods of the research the researcher used. Chapter four gives the details of researcher is analysis of data collected form the respondents  using the t-test statistics in testing the null hypothesis.

Finally in chapter five the researcher presents recommendation as well as suggestion for further research.

CHAPTER ONE

INTRODUCTION

• BACKGROUND OF THE STUDY

From time past productive resources owned by one person or group of persons. It has been a convention that the managers of the productive resources from time to time report back to the owner (s)  of the resources on how thye fare with the resources entrusted to them.

In a similar view Millichmp 1999 opined that most business today are operated by limited companies, which are owned by their shareholder and managed by directors appointed by the shareholder. Corporally the public own central government resources including nationalized industries but they are managed by the government.

As a result of this divorce between resources management and ownership it has become expedient and pertinent that has become expedient and penitent that an independent body or person (s) different form both management and ownership be situated to examine the account rendered by the manager to the owner of the economic resources for such accounts to be reliable credible and trust writing by the owners and other interested user of financial report hence the emergence of auditing as a profession.

Auditing which has become the owners “third eye” is very important in the public sector of Nigeria economy in view of fact that over 65% of the assets base and other productive resources of the country come under the control of the public sector of the economy. These assets need to be safeguarded in order that the real owner (the public) can enjoy their full benefits.

The relevance of auditing as it regards proper accountability and safeguard to the nation asset base was borne out of the fundamental roles the public sector accounting play in effective and efficient governance of the country. Ani 2001 save the rotes of public sector accounting to include the following.

1. Control purpose: To ensure efficient financial administration through system of internal control and management
2. Planning Purpose: To provide historical bases for model budget and plans as guide to the formulations of policies
3. Accountability purposes: To provide a system of financial accountability by which will promote stewardship of assets deter waste dishonesty and extravagance and promote effectiveness of reasonable cost.
4. Appraisal Purpose: To provide outsider with financial data that will help them to reach informed decision.

The basic functions of auditing therefore are of two types :

Primary and secondary functions.

The primary function of auditing is to enable the auditors to report as to whether the financial prepared my manager presents a true and fair view of the state of the financial affairs of the organization during the period under review while the secondary functions as are to detect fraud and errors and prevent fraud and errors in the accounting system. But how relevant has public sector auditing become in view of the current decay in the management of public resources in Nigeria? In the nutshell corruptions bribery mismanagement of  government resources and lack of honesty that characterize the economic life in Nigeria has dragged the efficiency and proficiency of public sector auditing in Nigeria to the mud.

Public office holder and the entirely of the agents of government at all levels in Nigeria have made the public sector audit system which to was enshrined in our constitution to ensure proper accountability transparency and good government a mere subject of contemplators system should not permit looting of real asserts and public funds and mismanagement of the scare economic resources as it obtain in Nigeria public sector.

The factors or problem that lead to the ugly scenario described above are not far fetched. This is because most of the auditors appointed by the executive arms of government at all level of governance to take the mantle of auditors responsibilities in the public sector are benefit of the contravention  ethical and professional qualities and standards which an auditor must have.

The professional qualities and auditing standards issued and approved by American institute of certified public accountants and adopted by Nigeria Accounting Standard Board (NASB) includes:

1. Competence: An auditors must be thoroughly  trained and move his competence before he can sign an audit report. This implies that he must belong to a professional body approved by the parliament.
2. Independence: An auditor cannot give an unbiased opinion unless he is independent of all parties involved and must be seen to be so.
3. Integrity: Qualified accountants are renowned for their honest discretion and tactfulness.

In Nigeria these qualities and standards enumerated above are almost absent and auditors are not appointed inconsonance with relevant statutory provision of audit regulatory authorities or laws such as relevant sections of company and allied Matters  act 1990 (CAMA) and the Nigerian constitution. Nepotism tribalism and police affiliation and compensations are criteria used in Nigeria to appoint auditors into the public sector. These have made audit system in the public sector a weak ineffective and above all unreliable when it is compared with what obtains in the civilized world where we repatriated the practice of auditing to Nigeria. The independence of auditors in the public sector  do not consider whether guaranteed and therefore are impaired. The manner in which auditors are also appointed in the public sector as not consider  whether the person to be appointed has competence and all the technical where withal and know how required of an auditor the qualities of honesty discretion and tactfulness which are paramount and the aroma of auditing world over are exiting in Nigeria only in theory.

Based on these distortions and decadence in the system of auditing in the public sector it has become a clarion call that a reappraisal of public sector auditing in Nigeria be done to reposition and revamp the system so as to reap all the benefit inherent in an functional audit system hence my choice of the topic (auditing as a control in the  public sector accounting)                                                     

 

• STATEMENT OF PROBLEM

The enumerated problem below are found to be inherent in the audit system of the public sector in Nigeria.

1. The impact of auditors role to promote transparency accountability and encourage good governance are not felt in the public sector.
2. It was difficult to ascertain the extent professional ethics and auditing standards were applied by auditors in the public sector
3. Bribery and corruption in the public sector has reduced the efficiency and proficiency of auditing in serving its control purpose
4. It was difficult to ascertain the extent nepotism and political affiliation interfere in the appointment and removal of auditors in the public sector.

 

• PURPOSE OF THE STUDY

This research top auditing as a control in public sector accounting a case study of federal ministry of finance Enugu was set towards establishing the following objectives.

1. To ascertain the roles auditors play to promote transparency accountability and encourage good governance in the public sector especially in the federal ministry of finance Enugu.
2. To find out the extent professional ethics and audit standards were applied by auditors in the public sector.
3. To ascertain the extent bribery and corruption in the public sector has reduced the efficiency and proficiency of auditing in playing its control purpose in federal ministry of finance Enugu.
4. To find out the extent nepotism favoritism and political affiliation interfere in the appointment and removal of auditors in federal ministry of finance Enugu.

 

• SCOPE OF THE STUDY

This research work is limited to the role auditing system play in public sector accounting in federal ministry of finance Enugu.

 

• RESEARCH QUESTIONS

To guide this study four research  questions were formulated as follows

1. To what extent do auditors role promote transparency accountability and encourage good governance in the federal ministry of finance.
2. To what extent do profession ethics and auditing standards were applied by auditors in the federal ministry of finance Enugu
3. To what extent does bribery and corruption in the public sector reduce the efficiency and proficiency of auditing in serving its control purposes in the federal ministry of finance Enugu.
4. To what extent do nepotism favoritism and political affiliations have interfered in the appointment and removal of auditors in the federal ministry of finance Enugu?

 

 

• HYPOTHESIS

Ho₁:   There  was  no significance difference (P<:05) between the mean

perception of the senior and junior staff of federal ministry of finance on whether the impact of auditors role to promote transparency accountability  and encourage good governance are felt in the ministry.

Ho₂:   There  was  no significance difference (P<:05) between the view of

senior and junior staff of federal ministry of finance on whether the extent professional ethics and auditing standards were applied by auditor in the ministry

Ho₃:   There  was  no significance difference (P<:05) between the mean

perception of the senior and junior staff of federal ministry of finance on  extent bribery and corruption in the public sector has reduced the efficiency and proficiency of auditing in the ministry.

Ho₄:   There  was  no significance difference (P<:05) between the view of the

senior and junior staff of federal ministry of finance on the extent nepotism favoritism and political affiliation interfere  in the appointment and removal of auditors in the ministry.

 

• SIGNIFICANCE OF THE STUDY

This work will be of immense benefit to the federal ministry of finance because of the elaborate emphasis placed on the role auditing play in ensuring proper accountability transparency waste determinate and promotion of good governance which the ministry is striving to achieve.

The entire stakeholder in the management of centrally owned economic resources will find the research work very beneficial especially now that fight against corruption and bribery is one of the priorities and challenges of present dispensation.

The work will also be immense benefit to all  the following peculiar ways:

1. The study attached serious emphasis on the auditing standards such as independence competence integrity and objective as the fundamental criteria to serve as bench marks in measuring the qualities of auditors to be appointed in the public sector.
2. The study exposed a lot about corruption in the public sector and this will serve as means of complimentary government effort in the fight against corruption in the sector.
3. The knowledge that accounting and auditing activities are geared towards guiding against misuse of scare economic resources is vital indispensable in the management of public financial affairs. The study gives knowledge to the key player in the public sector. The study also highlighted area of significance in the public sector auditing which need serious and immediate improvement  such areas includes auditor independence auditor’s liability auditors appointment and removal.

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