THE ROLE OF ACCOUNTANT IN MANAGING AND LIQUIDATING DISTRESSED BANKS
CHAPTER ONE:
INTRODUCTION
1.1 Background to the Study
Banks plays crucial roles in the process of economic development by mobilizing funds from the surplus spending units into the economy, and by on. Lending such funds to the deficit spending units fro investment, banks increase I the process. The quantum of national savings and investments through an appropriate investments multiplier, the volume of goods and services produced in an economy increases overtimes as a result of the investment projects embarked upon through banks funds.
Also through banks direct and indirect contributions towards the growth of the national economy, they (banks) succeed in promoting an efficient payment system, and in creating banking habits and in developing the society at large.
I intend to look at the possible reasons for bank distress and the effects of such failures on the rest of us before looking at “The Role of Accountant in Managing and Liquidating a Distress banks”.
A various times over the past five years of the structural adjustment programme (SAP) the banking industry had to cope with different types and forms of difficulties, all in a bid to record and sustain what one may call impressive performance we have for instance been at different times, the removal and late re-introduction of selling on interest rates.
The seemingly nectarous and dreaded stabilization securities have also become one source of treasury management policy devotement that banks have learnt to live with.
The term “distress” means great pains discomfort or serious sufferings caused by wants of money or mismanagement of money by bank officials which as we know is a complete relation of the trust reposed I them by innocent investors.
The role of accountant in managing and liquidating a distress banks are too much and cannot be over emphasized when liquidating a distress banks.
Accountants has to see that all the assets and liabilities of distress banks are being valued by expert values.
The accountant has to be fully involved in appointing an expert liquidator who would then sell the assets and liabilities of the distressed bank by means of auction to the general public.
In this case, it is not only that the property of the bank is being liquidated but also, the property of the debtors of the distressed bank. The liquidator has to fall back on the assets which the debtors of the bank used as their collateral when borrowing money from the bank.
The money being recovered from the proceed should be used to settle the creditors of the distressed banks. This is so because the bank has been turned “DISTRESS” by the Central Bank of Nigeria (CBN) as a result of its inability to meet up with the stipulated guidelines of having of capital and non-marketable assets base.
1.2 Statement of Problem
There are many problems which could eventually lead to bank distress just as there are many possible causes of death of a human being.
Some of the problems are stated here but they are in no way exhaustive.
i. Bad management
ii. Inadequate capital
iii. Risk asset portfolio
iv. Assets and liabilities management
v. Boardroom crisis
vi. Inability to adopt to changes
vii. Fraud
viii. Planning etc.
1.3 OBJECTIVE OF THE STUDY
The researcher is precisely focusing mainly on the objective of the managing and liquidating a distress bank in the sense that she carried out her study which intend to ascertained how the property of the distress bank should be disposed as a way of recovering in full or part of the money deposited by the customers during the banking operation.
The study is also designed to highlight the consequences of liquidating a distress bank which include how exactly the asset should be valued to make sure that the auctioneer does not pay less or making a pledge of paying later.
In order further, this course of study the following aims are being considered as some of the objectives of managing and liquidating a distress bank:
a. Distress bank
1.3 Research Questions
· What is the role of accountant towards the inherent weakness of programmes, policies, systems and agencies set up by the government or the institutions?
· How do we ensure that fraudster does not escape the arms of the law by the use of forensic techniques?
· What is the main function of accountant?
· What are the necessary tools that aid economy to achieve its developmental goals?
· What are the services of accountant and accountant in minimizing corporate crime and fraud?
· How does government prevent and protect shareholders from the harm of corporate failure?
1.4 Objective of the Study
1.5 Statement of Hypotheses
Hypothesis is a tentative statement of relationship between dependent and independent variables. This hypothesis intends to gather data and test.
The following hypothesis are tested:
Hypothesis One
HO: The activities and functions of accountant will not help to reduce fraud and corruption in an emerging economy.
HI: The activities and functions of accountant help to reduce fraud and corruption in an emerging economy.
Hypothesis Two
HO: That despite the different regulatory agencies established by government, nothing seemed to have been achieved in an attempt to reduce corporate fraud and corruption.
HI: That despite the different regulatory agencies established by government, something seemed to have been achieved in an attempt to reduce corporate fraud and corruption.
Hypothesis Three
HO: That accountant service employed in the private and pubic sector or organization and other institution through their expert suggestion will not assist in the growth and development of such organization.
HI: That accountant service employed in the private and pubic sector or organization and other institution through their expert suggestion will assist in the growth and development of such organization.
1.6 Significance of the Study
· This study will in no small way assists in bringing to bear the knowledge of accountant in a more familiar way to citizen of Nigeria.
· The suggestion provided, if adequately implemented will obviously minimize if not completely erase the rate of fraud and corruption in most Nigerian organizations.
· The study further highlights the relevance of accountant to the legal system in terms of being an expert witness.
· This study will be of immense value to other researchers in the field of academics by proving secondary data for their research work.
· It will also aid managements effectiveness and efficiency in using forensic techniques to reducing fraudulent activities in their establishment.
1.7 Scope of the Study
This study examines the relevance of the accountant in fraud detections in Nigeria. This study will illustrate the role of the accountant as it impact on organizational timeframe performance in Nigeria between 2008 2013.
For the course of this study, the researcher used a high sample size of 50 for effective survey.
1.8 Limitations of the Study
The essential constraint militating against this research work is the inability to assess a sizeable number of accountants, accounting firms, banks and other financial institutions given the time constraint for the completion of this work.
1.9 Definition of Terms
Industrialization: Is a process of social and economic change whereby a human society is transformed from a pre-industrial to an industrial state.
Forensic Industrialization: Is an expertise laboratory, combined with the rapid response capacity across analytical techniques, which can give customers a rapid analysis and understanding of crucial industrial processes and issues.
accountant: Is the identification interpretation and communication of the evidence of economic transaction and reporting system. It is the application of legal and financial skills in the conduct of evidence with respect to unresolved issues in the business communities.
Forensic: Is a scientific method in the investigation of crime. It can also be seen as a method of fraud investigation which includes the analysis of records to prove or disprove.
Accounting: Is seen as a systematic identification, measuring, recording, classifying, summarizing, interpreting and communicating of financial or economic information so as to enable the users of the information make an informed judgement therefrom.
Fraud: Is a legal term that refers to the intentional misrepresentation of the truth in order to manipulate or deceive a company or individual.
Auditing: Is a systematic process of objectively obtaining an evaluating evidence regarding assertions about economic actions and events to ascertain the degree to correspondence between those assertions and established criteria and communicating the results to interested users.
It is also the independent examination of, and expression of opinion on the financial statement of an enterprise by an appointed auditor in pursuance of that appointment and in compliance with any relevant statutory and professional obligation.
