Accountant’s Role in Project Feasibility Essay

Many new enters which develop passed countless feasibleness and viability appraisal studies relieve superstar and only(a)self been sunk by unexpected scourts such(prenominal) as flood. fire, burglary, changes in legislation, plague, demographic shifts, an softness recruit and/or keep qualified staff, the unsuccessful person of a major customer, seasonal influenceer demands, health sc ars, product recalls due to vile quality, withdrawal of financial support, weather, new engineering and poor management to list yet a few. Many plans of course fecal matter pass feasibility tests and studies and be brought bend by sheer incompetence or downright dishonesty. A key component part in any feasibility cultivation must be ensuring that you are dealing with correct facts, correct assumptions and up to ascertain financial info. Al ab bulge let bulge out daily, Tanzanian Newspapers Larry tumid reports of new manufacturing ventures soon to be launched by individual or by local anaesthetic groups.Perhaps, tomorrow a state government activity exit be telling us how college industries go out stem the flow of youths from rural to urban areas. From the headlines alone Tanzanians mess non escape the hint that the rest holds great promise for rare economic and social progress. But these expectations depart be fulfilled only if most of the compass point projects survive their early lives. Besides, not all those new projects will be completed. Some that stir completed will not prove profitable and whitethorn soon close down. harmonise to Nwoko (198834) summits that in simple terms one occasion for which new projects whitethorn not be completed nevertheless have to be abandoned or profitable ventures may get choked up by controllable environmental factors and circumstance is that fitting feasibility abridgment was not conducted forward take glowering of project. gibe to Ume 9197710).. utter that proposals schemes or projects for social, en vironmental and economic ontogenesis demand feasibility and viability appraisal.See much(prenominal)Manifest Destiny essayIn fact the two fundamental questions which feasibility and viability appraisal cipherk to answer are inevitable for prudent decision making at all levels in the society. The entrepreneur must have a huge range outlook on the think business enthronization, examine the alternative uses of capital and account for inflation in proximo value of cash flows, and forecast by and bylife events and financial requirements and carry sensitivity and happen outline.These are highly technical areas of noesis that calls for expertise skills. Therefore this category of military rank holds out limitless opportunities and boundless circumstance for service and rewards for the controls, economists, valuers or appraisers. This playing field provides an analysis and spokesperson of the principles of feasibility and viability appraisals and highlights the essence of t he submit matter. It also brings into sharp focus the accountants crucial contri exceptions which have hitherto tended to be lost in wide diffusion1.1Background.The think is divided into two sections. Section one which comprises chapter 1,2 and 3 deals with the main basis, scope and methodological analysis of he research. peculiar(prenominal)ally, chapter two provides an evaluation of the suppositious concept of investment funds appraisal. Hence, the contributions of various writers with calculate to the concepts of feasibility and viability studies as well as the role of the accountant in that respect off are examined under the heading writings re hear. The second section comprises chapter 4 and 5, and focuses on feasibility and viability plate con on a applicative illustration of feasibility and viability case discover of a household cassava- amylum production.1.2Statement of the problemOne of the problems of a successful industrialization in the maturation countries is undoubtedly lack of salmagundiulation of a project in such a way that its potential profitability both from the public or private locating point whoremonger be estimated on a firm basis. According to Ezeanagu (199114). This self-assertion is evidently proved by the natural selection of the fittest rate of the national directorate of employ supported small scale enterprises in Nigeria which has been put at a unpolluted 15%. According to Uwakaneme (19801) this problem can be pinned on the tendency in Nigeria entrepreneurs to neglect thinking through their plans carefully in the beginning in row of feasibility and viability canvass before committing unparalleled funds and energy apart from scant(predicate) starting capital and shortage of masterly technical and managerial manpower.Many well(p) business ventures are abandoned after plunging in huge amounts of money because their occasion just embarked upon them in that they feel on that point is market demand and th ey could get comely funds to execute the project. According to Ughamadu 9199018) regrettably, as Uwakaneme (19803) puts it, many Nigerian businessmen see feasibility studies not as a vital part of their project but as an imposition and an absolute essential for fulfilling loan requirements or for attracting equity participation.Thus, the more embellished the report the better. Available evidence indicates that even trusted accountants, consultants prepare project reports and projections to pillow slip their clients requirements and earn their fees insensitive of the credibility to Olashore 919855), consequently, the proposals get rejected by the bankers, or divvy up the facilities granted, the business proprietors soon find themselves in trouble when they are faced with authorized life situations as distinct from the golden picture painted by the initial projections by the accountants.1.3Research aims1.To interpret the main techniques of appraisal commonly adopted for analyti cal purposes and to determine the reasonableness of such in practical situations. 2.To appraise the potential of feasibility and viability studies in successfully carrying out a project ideas. 3.To learn the general role of the accountant in the formation and development of business. 4.To identify the specific role of the accountant in feasibility and viability appraisals. 5.To illustrate the principles and applications of feasibility and viability studies suing a small scale cassava starch plant as a case studyMain objectiveSpecific objective1.4Research questions.Following from the problems identified in the problem statement as say above, the following fundamental questions have income imperious for this study 1.What are the underlying principles and substance of feasibility and viability appraisals? 2.What impact do feasibility and viability appraisals have on the survival o failure of new projects? 3.What is the role of a professional accountant in the dressing of credible feasibility and viability appraisals in entrap to avail avert project failure1.5Scope of the studyThis study does not brood much on the truth or otherwise of the failure of accountants to carry out their role in feasibility and viability appraisals but merely examines what that role should be using a case study. Hence, there is no hypothesis or any conclusion of such.Research works in Nigeria peculiarly those adopting interview approach, are beset with a lot of limitations which include mass illiteracy, shortage of reliable secondary data loss against the research himself and ensure secrecy. Many of these limitations were experient in the course of its study.The study was carried out mainly in Enugu although somewhat data were gathered in Lagos. Therefore, the case study may not be regarded as a fact accompli report for investment purposes as only a restrict investment has been conducted and a number of assumptions made.These limitations not withstanding it is believed th at the findings of the study could be useful and should form the basis for further studies on the subject.1.6significance of the studyIf a project is well suppose and thoroughly appraised, a good consume on the subsequent stages of the project will see to its goals being achieved. Appraisal involves a careful checking of the basic data, assumptions and methodology utilize in project preparation, an in-depth review of the work plan, cost estimates and proposed financing, an assessment of the projects organizational and management aspects, and finally the grimness of the financial, economic and social benefits expected from the project. On the basis of such an assessment, a judgement is reached as to whether the project is technically sound, financially justified and viable from the point of view of the economy as a whole.The object glass audiences of this study are students of accountancy in the tertiary educational institutions and all those raise in the field of project eval uation. Since there appears to be no existing books on the role of the accountant in feasibility and viability studies, this project attempts to till that falling out for the benefit of accounting students. It would also help young entrepreneurs and indeed the management of mild business to appreciate the necessity of feasibility and viability appraisal which will translate to the survival of their business which will in turn enhance the attainment of the government objective of rapid industrialization 1.7Limitation and delimitation of the study1.8DEFINITION OF TERMSThe following are the contextual definition of some terms utilise in the studyACCOUNTANT excogitateA project is the use of one or more scarce resources during specific time period for the purpose of producing some economic returns or output at a later time. A project is the consumption in the near approaching of scarce or at to the lowest degree limited resources in the hope of obtaining in return over a thirster is an optimum set in the investment oriented by means of which a defined continuation of human and corporeal resources is expected to cause a determined amount of economic and social development. According Nweze (198734)INVESTMENTAccording to SIR D.C Osuagwu (200331) investments are carried out primarily for maximizing an entities wealth and can be varied into Mechanization of accomplish where a firm wants to change its manual system of production to installation of a machine or expansion is a process. Investment is an economic activity intentional to increases, improve or maintain the fatty qualify of the existing stock of capital. According to Nweze (198734). NB project evaluation, investment analysis or appraisals are for the purpose of this study, interchangeable and therefore used interchangeably here.feasibleness AND VIABILITYFeasibility and viability have been explained in detail elsewhere in this study. But for the constitute purpose let it suffice that severally th e mean practicability and profitability