THE ROLE OF PUBLIC ACCOUNTS IN THE FORMATION, ACQUISITION AND LIQUIDATION OF A COMPANY
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.
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Hence, accountant can be defined as the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by the users of the information. The American Institute of certified public Accountants (AICPA) defined accounting as the art of recording, classifying and summarizing in sufficient manner and in terms of money transaction and events which are in part of least of financial character and interpreting the results thereof.
G.O. Umeaka defined accounting from the system approach. The purpose of accounting is to provide information to its users for decision-making and the activities, which involves observation, collecting, recoding, analyzing and communicating information to its users and which requires transferring raw data into information. This definition is an adequate, for it is only what data which is a mere collections of facts expressed as symbols and characters are transformed into information that it can influenced decision.
W.W Bigg made effort to distinguish book keeping from accountant. The book keeping writes up books and makes accounting records, whilest the accountant design and controls book keeping system and utilizes information to prepare financial statement and advises management. Thus, the accountant is responsible for directing and coordination the works of the book keeping staff for designing and maintaining accounting system adequate to the need of a particular business.
From the forgoing, it is clear that the task of an accountant is collection data (sources document) involves, bills etc. classifying and recording these sources document using appropriate ledger account, summarizing those ledger accounts using financial statement communicating and interpreting the summaries to the responsible persons.
2.2 MEANING OF PUBLIC ACCOUNTANTS
Public accountants can be seen as those accountant whose services are rendered to the general public in fee basis.
2.3 ROLE OF PUBLIC ACCOUNTANT IN THE FORMATION OF COMPANIES.
Starting a new business is not a simple activity. It involves such complex operation, huge financial outlays and psychological imprisonment. And such corporate owners and potential investors should be guided in resolving various investment decision conflicts in order to ensure growth and profitable business.
In starting a business, there must be a business plan which serves as a guide to action. Planning is the most vital ingredient in the success of any business operation. Many business failed no because they pan to fail rather because they fail ti plan.
In planning the accountant carries out feasibility studies and financial analysis and establish cash flow patter. After the usually business planning and concept development, the accountant assist the businessmen in financing arrangement. Apart from direct involvement in financing of companies, the accountant can help business in intricate loan negotiation by preparing the loan land business plan. The Nigeria investment, information and promotion investment, information and promotion center a division of the federal ministry of industry keeps adequate records of investment opportunities in Nigeria which assist public accountant in identifying business opportunity and procedure for floatation, of companies in Nigeria. Thus on consultancy basis, the accountant on assisting individual investors to ensure about investment opportunities and procedure in Nigeria.
And with the opportunity and concept identified and developed, the business, need starts of. Before this, the business needs to registered with registrar of companies with office in different parts of Nigeria including Enugu. And the accountant can be immense assistance to inestors seeking to register their businesses. The accountant by the virtue of his profession is in the best position to assist the fires direction and promoters in registering their business by writing up the Article and memorandum of Association and prospective.
The accountant can designed and install on accounting and internal control system. And for existing business seeing diversification, the accountant can be of immense help in arriving at optimum decision. Based on this. The accountant can advice based on economic rationality to keep or drop a product or department make or buy a component, buy or lease asset and assist businesses on matters relating to taxation and concession in income tax relief, import duties relief and approved status. And for company seeking quotation in the Nigeria stock exchange market the accountant can help to determine the best floatation option and the choice of issuing houses that will ensure maximum return at low floatation cost.
2.4 ROLE OF PUBLIC ACCOUNTANT IN ACQUISITION OF COMPANIES.
The term acquisition as stated in the definition of terms refers to the entire process of company mergers, absorption amalgamation and take over bids. The classification has become necessary in view of the slight differences in the operation terms
When a company becomes the subsidiary of another the combination methods is also referred to as the purchase method. Acquisition is the purchase of a company or part of it, so that the acquired company is completely absorbed and no longer exist as a business entity and it can take many forms, depending on such involved in the transaction, the amount of money of money involved in the transaction, and the type of company. The attraction of acquisition of economic or scale or scope and market entry. The reason normally give for external expansion. Though, acquisition can be one or more of the following mergers often provide quickest way of entry into other market and industries. Opportunities are created for excess capacity to be utilized, complementary capacities may be achieved.
Thus, in acquisition bids, accountant must always strive at ensuring information synergy. For example, if a merger is directed towards combining a distribution network in an overseas country with a product in the home front and local market intelligence held by the oversea firm. Hence in closing partner for mergers the accountant must ensure that the firm have complementary goals. A good way of deciding whether parties have complementary goals is to look at their target customers and those they actually sell to
The central key for the success of any acquisition is its management by the businessmen the planning, execution and post acquisition for a profile. The investor should construct a check list that identified a prospective company. Its listing management product, finance marketing production and labor relations and then evaluate the prospect. Prospects can be be identified through internal referrals and external sources such as accountants, brokers and investment banker.
2.5 ROLES OF PUBLIC ACCOUNTANT IN LIQUIDATION OF COMPANIES.
In matters concerning liquidation of companies the accountant serve as an insolvency practitioner, his brief it to examine the company to see whether the situation is irretrievable (in which case immediate liquidation was called for) or whether there was any chance of a rescue. In the face of possible corporate failure the accountant should find steps to be taken to hold off unwelcome attentions of creditors, particularly those who had threatened winding up petition.
The insolvency Act 1986 has procedure for winding up of companies. The simplest of such procedure is the company voluntary Arrangement (CVA). It is essentially a matter of contract between the company and its creditors sanctioned by the provision of the insolvency Act and the insolvency rules. Creditors have the option of voting for or against a voluntary arrangement at a meeting held for that purpose. If the role in favor of the company affairs are paced in the bands of a supervision who must be a licensed insolvency practitioner.
A further item of considerable importance is the preparation of cash flow for cost because the court has to persuaded that sufficient cash will be energized over the administration continue trading. The must act as the company director to ensure that the situation did not deteriorate between them and the time the position was heard. When the other is finally granted by the court the accountant is then required by the court the accountant is then required by the court insolvency Act of 1986 to call creditors meeting within the month of formulate proposal and present to them account which showed that the company had come back to life. Apart form acting as an insolvency practitioner or an administrate for cost because the court has to persuaded that sufficient cash will be energized over the administration continue trading. The must act as the company director to ensure that the situation did not deteriorate between them and the time the position was heard. When the other is finally granted by the court the accountant is then required by the court the accountant is then required by the court insolvency Act of 1986 to call creditors meeting within the month of formulate proposal and present to them account which showed that the company had come back to life. Apart form acting as an insolvency practitioner or an administrate for cost because the court has to persuaded that sufficient cash will be energized over the administration continue trading. The must act as the company director to ensure that the situation did not deteriorate between them and the time the position was heard. When the other is finally granted by the court the accountant is then required by the court the accountant is then required by the court insolvency Act of 1986 to call creditors meeting within the month of formulate proposal and present to them account which showed that the company had come back to life. Apart form acting as an insolvency practitioner or an administrate for cost because the court has to persuaded that sufficient cash will be generated over the administration continue trading. The must act as the company director to ensure that the situation did not deteriorate between them and the time the position was heard. When the other is finally granted by the court the accountant is then required by the court the accountant is then required by the court insolvency Act of 1986 to call creditors meeting within the month of formulate proposal and present to them account which showed that the company had come back to life. Apart form acting as an insolvency practitioner or an administrator, the accountant can be appointed as a receiver or liquidator especially when it has become glaring that corporate failure in inevitable. Millichamp noted that debenture holds in a company can take assets of the company on charge.
- Fixed specific charge over assets
- Floating charge over all assets.
And if some event for seen in the debenture deed should happen, for example holder can appoint a receiver to take possession of the assets charged and to realize them. The amount owned to the debenture holders.
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