1.1. BACKGROUND OF THE STUDY
1.2 STATEMENT OF PROBLEM
It was noted that the operating transaction used by small scale business often differ significantly from those of large companies. Some small-scale business do not keep good accounting system or records of transaction, they did it out of ignorance. Many proprietors do not know the amount of pro lit he is making and whether he could do better and by how much the problem is attributed to the qualification and exposure of the proprietors. The research has shown that only few of proprietors contribute to the fund of initial capital. Most entrepreneur of small scale business is aversive to audit their accounts because of the cost and other sees it as a way of probing into their privacy. Most of these small scale business lack controls over the running activities of their business organization. Their activities are run haphazardly. Since most of’ mall scale business do not audit their accounts they don’t pay tax to the government, even few that pay tax, pay it out their direction and not their profit. Personal interview with auditors from two accounting firms visited revealed that accounts business could be adopted, the small scale business inclusive irrespective of the non-maintenance of proper accounting records.
1.3 AIMS OF THE STUDY
The major purpose of this study is to examine influence of private audit on growth of small and medium enterprises. Other general objectives of the study are:
1. To examine the level of practice and private audit function in Small and Medium Enterprises.
2. To examine the level of improvement in the growth of Small and Medium Enterprises.
3. To examine the influence of private audit on the growth of small businesses in South-South.
4. To examine educational qualifications of the chief audit executive of small and medium Enterprises.
5. To examine the relationship between effective private audit and growth of Small and Medium Enterprises.
6. To suggest ways in which private auditing will aid in assisting the Small and Medium Enterprisesto achieve their goals and objectives.
1.4 RESEARCH QUESTIONS
1. What is the level of practice and private audit function in Small and Medium Enterprises?
2. What is the level of improvement in the growth of Small and Medium Enterprises?
3. How does private audit influence the growth of small businesses in South-South?
4. What are the educational qualifications of the chief audit executive of small and medium Enterprises?
5. What is the relationship between effective private audit and growth of Small and Medium Enterprises?
6. What are the ways in which private auditing will aid in assisting the Small and Medium Enterprises to achieve their goals and objectives?
1.5 RESEARCH HYPOTHESES
H0: Private auditing has no impact on small and medium scale enterprises in Nigeria.
H1: Private auditing has a significant impact on small and medium scale enterprises in Nigeria
H0: There is no significant relationship between effective private auditing and growth of Small and Medium Enterprises.
H1: There is a significant relationship between effective private auditing and growth of Small and Medium Enterprises
The study is intended to benefit the following:
The study findings will be of immense importance in the sense that they will assist management of small and medium enterprises to realize how internal controls can affect its operations and growth.
Academicians and researchers- this study is intended to add knowledge to previous studies done on internal controls by primarily focusing on small and medium enterprises and growth. The study shall therefore serve as a reference for further research on the topic of relationship between internal controls and growth of Small and medium enterprises.
1.7 SCOPE OF THE STUDY
The study is based on influence of private audit on growth of small and medium enterprises (SMEs) in south-south Nigeria.
1.8 LIMITATION OF STUDY
Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.8 DEFINITION OF TERMS
Private Auditing: it is the independent appraisal of the functions and quality of performance of an organization by a specially assigned staff as part of the private control system. It objectively examines events and reports on the adequacy of private control as a contribution to the efficient and effective use of resources
Audit: according to Taylor (1982), an audit is the independence examination of the financial statement of an organization with a view to expressing an opinion as to whether these statements give a true and faire view and comply with the relevant statutes for the period under review and of the financial state of the organization at the end date so enabling the auditor to report thereon.
SMEs: Small and medium sized enterprises are commercial business entities that are generally distinguished from large companies by their size and turn-over. Medium-sized enterprises have fewer than 250 employees and annual turnover not exceeding EUR 40 million. Small enterprises have fewer than 50 employees and an annual turnover not exceeding EUR 7 million (European Commission, 2003).
Enterprise: Enterprise refers to a unit of economic organization or activity, especially a business organization (Merriam-Webster, 2008)
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