Impact Of Poor Record Keeping On The Management Of Business Enterprise In Onitsha Urban

ABSTRACT

The study investigated the “Impact of Poor Record Keeping on the Management of Business Enterprise in Onitsha Urban”. Three research questions were formulated. Survey Research design was adopted for the study. The population of the study consists of 117 senior staff of registered business enterprise in Onitsha Urban. Simple random sampling techniques were adopted to select 117 respondents but retrieved 96 respondents. Twelve structured questionnaire items was used as instrument for data collection. After the analysis, the following findings were discovered; the research work revealed that majority of the respondents don’t keep business accounting records and also revealed that majority of the business enterprise don’t operators measure performance of their businesses record. It is however recommended that there is need for the owners and managers of the business enterprises to embrace proper accounting records keeping practices, such as separating business money from personal money, implementing a record management training programme, knowing exactly what is needed to be record and making use of modern equipment like computer in recording documents.

CHAPTER ONE

INTRODUCTION

Background to the Study

The word “record keeping” is always emphasis in our day to day business activities and life in general. Many new business owners are daunted by the mere idea of record keeping and accounting. But in reality, both are pretty simple. Keep in mind that record keeping and accounting share two basic goals: to keep track of income and expenses, which improves chances of making a profit, and to collect the financial information necessary for filing various tax returns. There is no requirement that records are kept in any particular way. As long as records accurately reflect the business’s income and expenses, there is a requirement, however, that some businesses use a certain method of crediting heir accounts: the cash method or accrual method. Depending on the size of the business and amount of sales, one can create own ledgers and reports, or rely on accounting (Williams, 2010).

According to Ole (2013), “Record-keeping” can be defined as the recording of business transactions in a systemic way such that the financial position of the business can be readily ascertained. Also according to Longe (2012), Recording-keeping is the systematic record of transactions on a daily basis in the appropriate books. In other words, it is concerned with the collection and recording of business or transactions.

Record keeping” can also be defined as the identification, classification, storage and protection, receipt and transmission, retention and disposal of records for preparation of financial statements.

Again, “record keeping” involves a process that is followed by Accountants and book keeping staff in processing raw financial data into output information inform of financial statements.

The impact of record keeping is a function of the benefit that are derived by the members of the society who had bind themselves into the social organization of their survival and want satisfaction quest (Anyigbo 2011). Business benefit from availability of record keeping information, equality important is the availability of record keeping that facilitates the solution or resolution of business planning, organization and control function of the enterprises as a social organization. Most small scale firm owners prefer to recruit unskilled personnel especially clerical and accounting staff. The product of these unskilled accounting (clerical staff) has only succeeded in helping business enterprises/firms to stagnate; some firms have even wound up. This was because unskilled accounting staff could not keep reliable accounting records that would stand the test of time statutory; such staff could not correctly determined the profit or loss of the firm preparing profit and loss account. There have been a number of reasons to failure of their economic growth being brought forward by different people and organizations: generally, business enterprises are confronted with unique problems including heavy costs of compliance resulting from size. Other constraints include insufficient working premises and limited access to finance. In addition, business Development Services namely, service related to entrepreneurship, business training, marketing, technology development and information, are not readily available.

Unfortunately, the Nigeria situation in the business of record keeping and management has not been too successful because of lack of management components (Ademola, Samuel &Ifedolapo O. 2012). The problem of ascent record keeping was crude, there was no paper or good system of storage. It was not viewed to be very important and reliable source of information and references because of the use of modern business equipment such as the computer, Photostatting machine and tape recorder. Improper record keeping hamper the smooth running of modern business.

Despite the efforts made by the government and other organizations, SMEs continue to fail to perform their business effectively. This is mainly because most of them do not keep proper records of transactions in their business which make them lose track of their business daily transactions. In return, they cannot account for their expenses and their profits at the end of the month. This makes the business fail to make decision concerning finances. This problem was supported by a number of various authors who talked about the existence of this problem in business enterprises; during the operation in each year, some of business enterprises run bankrupt because of awareness performance and poor implementation of record keeping procedures for the control of assets they have (Sarapaivanich, 2006). While deficiencies in record keeping management have been repeatedly cited as root cause of business failure two arguments are advanced for such deficiencies business enterprises, that new accounting is not relevant and that business enterprise managers are unable to make use of proper record keeping (Najak and Greenfield, 2013). Among business enterprises, only a few keeps record keeping for the transactions they make on daily basis and most of them do not keep systematically in a way that a trader will not be able to find out a true and fair position of the business.

Statement of the Problem

A number of business enterprises have not given much attention to book keeping in relation to their business transaction, despite the importance of SMEs, their failure rate in Nigeria considerably high due to a number of reasons. This could be lack of sound knowledge in book keeping practices by owners or respective managers. Also, there was difficulty in ascertaining whether comprehensive accounting records that satisfied the laws under which it was incorporation had been kept. It was hard to determine to which extent no adherence to laid – down accounting procedure and constituted in the wheel of implementation of good accounting system. Difficult exist in ascertaining how far non – recognition of the necessity of accounting to continued existence and growth, low educational background of owners and the employment of unskilled accounting staff had affected the production of unreliable accounting or financial statement.

From the research carried out, revealed that poor record keeping is a cause for business failure. In most cases, this is not only due to the low priority attached by new and fresh entrepreneurs, but also a lack of the basic business management skills. Most business people, therefore, end up losing track of their daily transactions and cannot account for their expenses and their profits at the end of the month. The misuse and inaccuracy of accounting information causes businessmen to inaccurately assess their financial situation, and make poor financial decisions, as well as leads them to face with high failure rate.

Record keeping in Nigeria is plagued by the following factors; inadequate skilled and experience, management personnel, lack of sufficient funds, the placement of record management in low priority pedestal in relation to other things and computer terminals.

Large and medium-size companies have internal accounting personnel and sophisticated records and systems to guide management. On the other hand, the owner of a small business usually relies primarily on a book-keeper and an outside accounting firm to maintain the company’s records and provide guidance. Despite the studies from other countries, showing the impact of poor record keeping on the management of business enterprises performance, there are no similar studies in Onitsha urban. Little is known about the use of accounting records in business enterprises, the importance of record keeping among business enterprises and the challenges business enterprises face in preparation of record keeping. This study tried to bridge this information and therefore its purpose was to investigate the role of accounting records on SMEs performance.

Purpose of the Study

The general objective of this research was to examine the impact of record keeping on the management of business enterprises in Onitsha urban. Specifically this study aimed at achieving the following specific objectives:

1. To determine how inadequate record keeping affect a business enterprise in Onitsha Urban.
2. To examine whether lack of record keeping skills by the owner of a business affect the business enterprise in Onitsha Urban.
3. To determine whether incompetent record keeping affect business enterprise in Onitsha Urban.

Research Questions

To achieve the objectives of this study the following research questions were put forward by the researcher:

1. How does inadequate record keeping affect a business enterprise in Onitsha Urban?
2. How does lack of record keeping skills by the owner affect the business enterprise in Onitsha Urban?
3. How does incompetent record keeping affect business enterprise in Onitsha Urban?

Significance of the Study

It is hoped that the successful completion of this work could reveal among the following: the relationship between records keeping & business enterprises performance, the extent to which record keeping skill influence business enterprises and the public or private organization influence business enterprises on the use of record keeping. Therefore, this study could be of immense relevance in the following area: Firstly, to the Enterprises; it improve management of the business enterprises. SMEs owners could know the importance of keeping records as they will be able to maintain the transactions, daily stock taking made and find out whether there is profit or loss. Know how to manage their finances, profits and losses, obtain knowledge on business management.

Thirdly, it could equally guide and guard government at all levels and ministries of commerce and industry.

Finally, the findings and recommendation could be of a great help to all entrepreneur in Anambra State and student carrying out research, teacher, trainers, curriculum designers, and professional associations.

Scope of the Study

The scope of the study focuses on impact of record keeping on management of a business enterprise in Onitsha Urban.

Based on the study it is restricted to determine the factors responsible for poor record keeping in business enterprise and does factors are  inadequate recording keeping, lack of accounting record keeping skills by the owner of a business and incompetence recording keeping by both the owner of the business and the staff as well among others.

Pages:  58

Category: Project

Format:  Word & PDF               

Chapters: 1-5                                          

Source: Imsuinfo

Material contains Table of Content, Abstract and References.