Accountant’s Role in Project Feasibility Essay

Many new find outs which have passed countless feasibleness and viability estimation studies have been sunk by unexpected events such as flood. fire, burglary, changes in legislation, plague, demographic shifts, an inability recruit and/or keep admitable staff, the failure of a major customer, seasonal demands, health scares, product rec anys due to poor quality, withdrawal of financial support, weather, new technology and poor management to list but a few. Many projects of course can pass feasibility tests and studies and be brought und unmatched by sheer incompetence or downright dishonesty. A key instrument in any feasibility speculate must be ensuring that you are dealing with correct facts, correct assumptions and up to date financial data. Almost daily, Tanzanian Newspapers Larry prominent reports of new manufacturing ventures soon to be launched by individual or by local groups.Perhaps, tomorrow a state government will be telling us how college industries will stem the fl ow of y come inhs from rural to urban areas. From the headlines alone Tanzanians cannot escape the feeling that the rest holds great promise for unprecedented stinting and social progress. But these expectations will be fulfilled only if most of the specific projects survive their early lives. Besides, not all those new projects will be completed. Some that get completed will not prove profitable and may soon close down. According to Nwoko (198834) summits that in simple terms one reason for which new projects may not be completed but have to be throw away or profitable ventures may get choked up by controllable environmental factors and circumstance is that proper feasibility analysis was not conducted before take off of project. According to Ume 9197710).. stated that proposals schemes or projects for social, environmental and economic development demand feasibility and viability judgement.See moreManifest Destiny essayIn fact the two fundamental questions which feasibility and viability appraisal seek to answer are inevitable for prudent decision making at all levels in the society. The entrepreneur must have a long range outlook on the intended business enthronisation, examine the alternative go fors of capital and account for inflation in future value of funds flows, and forecast future events and financial requirements and carry sensitivity and risk analysis.These are highly technical areas of knowledge that calls for expertise skills. Therefore this category of valuation holds out limitless opportunities and boundless range for service and rewards for the comptrollers, economists, valuers or appraisers. This study provides an analysis and illustration of the principles of feasibility and viability appraisals and highlights the essence of the subject matter. It also brings into sharp focus the accountants of the essence(p) contributions which have hitherto tended to be lost in wide diffusion1.1Background.The study is divided into two sections. S ection one which comprises chapter 1,2 and 3 deals with the main basis, scope and methodology of he research. Specifically, chapter two provides an evaluation of the theoretical concept of investment appraisal. Hence, the contributions of various writers with regard to the concepts of feasibility and viability studies as well as the role of the accountant in that location off are examined under the heading literature review. The second section comprises chapter 4 and 5, and focuses on feasibility and viability case study on a practical illustration of feasibility and viability case study of a household cassava-starch production.1.2Statement of the problemOne of the problems of a successful industrialization in the developing countries is undoubtedly lack of formulation of a project in such a way that its potential profitability either from the public or snobby view point can be estimated on a firm basis. According to Ezeanagu (199114). This assertion is evidently proved by the su rvival rate of the case directorate of employment supported small scale enterprises in Nigeria which has been put at a mere 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 form of feasibility and viability study before committing only funds and energy apart from insufficient starting capital and shortage of skilled technical and managerial manpower.Many good business ventures are abandoned after plunging in huge amounts of money because their originator just embarked upon them in that they feel there is market demand and they could get enough funds to perform 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 necessity 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 suit their clients requirements and earn their fees insensitive of the credibility to Olashore 919855), consequently, the proposals get rejected by the bankers, or share the facilities granted, the business proprietors soon find themselves in trouble when they are approach with real life situations as distinct from the rosy picture painted by the initial projections by the accountants.1.3Research objectives1.To determine the main techniques of appraisal commonly choose for analytical 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 pose 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 identify in the problem statement as stated above, the following fundamental questions have income imperative for this study 1.What are the underlying principles and significance of feasibility and viability appraisals? 2.What bear on 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 preparation of thinkable feasibility and viability appraisals in order to help avert project failure1.5Scope of the studyThis study does not dwell 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 an y proof of such.Research works in Nigeria especially those adopting interview approach, are beset with a lot of limitations which accommodate mass illiteracy, dearth of reliable secondary data prejudice against the research himself and ensure secrecy. Many of these limitations were experienced in the course of its study.The study was carried out generally in Enugu although some data were gathered in Lagos. Therefore, the case study may not be regarded as a fact accompli report for investment purposes as only a limited investment has been conducted and a number of assumptions made.These limitations not withstanding it is believed that 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 formulated and thoroughly appraised, a good follow-through on the subsequent stages of the project will see to its goals macrocosm achieved. Appraisal involves a careful checking of the basic data, as sumptions and methodology used in project preparation, an in-depth review of the work plan, cost estimates and proposed financing, an assessment of the projects organisational and management aspects, and finally the validity 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 target audiences of this study are students of accountancy in the tertiary educational institutions and all those interested in the field of project evaluation. Since there appears to be no existing literature on the role of the accountant in feasibility and viability studies, this project attempts to till that gap for the benefit of accounting students. It would also help young entrepreneurs and indeed the management of small-scale business to appreciate the necessity of feasibility and viability ap praisal 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 used in the studyACCOUNTANTPROJECTA project is the use of one or more scarce resources during specific time period for the purpose of producing some economic makes or output at a later time. A project is the consumption in the near future of scarce or at least limited resources in the hope of obtaining in return over a longer is an optimum set in the investment oriented by means of which a defined continuation of human and clobber 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 wealthiness and can be varied into Mechanization of process 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 designed to increases, improve or maintain the productive 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, synonymous and therefore used interchangeably here.FEASIBILITY AND VIABILITYFeasibility and viability have been explained in period elsewhere in this study. But for the present purpose let it suffice that respectively the mean practicability and profitability