Financial Record Maintenance Practices in Business Establishment
Chapter One
OBJECTIVE OF THE STUDY
The purposes of this study are as follows
- To determine the general policy concerning information collection processing storage and retrieval measures undertaken by business establishments.
- To determine the storage facilities for keeping records, and if there is adequate care of records in business establishments.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Theoretical Review
Knowledge management theory
The proponent of knowledge management theory is Grand (1996). According knowledge management is the deliberate and systematic coordination of an organization’ s knowledge resources (people, technology, processes and organizations structure in order to add value through reuse and innovation. This is achieved through the promotion of creating, sharing and applying knowledge as well as through the feeding of valuable lesions, learned and best practices into corporate memory in order to foster continued organization performance. It is strategies and processes designed to identify, structure, value, leverage and share an organization’S intellectual assets to enhance its performance and competitiveness. It is based on two critical activities, capture and documentation of individual explicit and tactic knowledge and its dissemination within the organization. Knowledge management theory “is understanding implementing organization~ s information flows and implementing organizational learning practices, which make explicit key aspects of its knowledge base. Its about enhancing the use of organizational knowledge through sounds practices of information management. Knowledge management theory therefore is the theory under which information turned into actionable knowledge and made available effortlessly in a usable form to the people who can apply it (Partel and Hartly 1998). Hobtim (2004) knows that knowledge management is systematic approach to manage the use of information in order to provide a continuous flow of knowledge to the right people at the right time enabling efficient and effective decision making in their everyday business. The knowledge management processes involves acquisition, creation, identification, capturing, collection, organization, application, sharing, transforming and distribution of information. Knowledge management processes contribute to financial performances by improving job performance leveraging co-business competencies, accelerating the time to reconnect, reducing cycle time and enhancing product quality (Argote Ingram, 2000). Knowledge acquisition involves the process of creating, generating, developing, building and constructing knowledge. SMEs acquire knowledge from external sources such as hiring people possessing the required knowledge. Knowledge conservation involves organizing and applying it in ways that allow the knowledge to become formalized and accessible. In the content of SMEs, knowledge tents to be passed on without any associated records or documentation because of SMEs informal communication culture, SMEs tent to believe that it is not feasible to establish a formal system for codifying, organizing or storing knowledge because their employees are busy with their daily routines (Wong: Aspinwal,2004).Ifl addition,SME5 have few resources and reduced capacity to maintain a knowledge repositioning as compared with large firms. Thus knowledge tends to be stored in the head of owners, managers and employees Knowledge application involves sharing, retrieval, application and sharing knowledge that an employee fails to share is of is of little value to organization as applying and sharing knowledge means making it active and relevant for the organization in creating values
Financial Record keeping and Performance of SME’s
Record keeping itself has a long history dating back to 3600 BC (Mairura, 2011) where clay tablets were predominantly used to maintain records of list of commodities. Several books of records have come to pass as civilization permeates to every corner across the globe~ Record keeping involves the capturing, maintaining and provision of authentic and ready available records of business activities. There are different reasons for maintaining records and these vary from business to business. ASA & RIM (2011) argue that the primary motive for keeping records is at least to provide ample evidence of and information about business activities. Thus the existence of records underpins individuals, organization and social accountability as well as providing a back-up memory. The practice of records keeping and management involves record keeping systems, creation of record, control as well as automated management information system (Waiters, 1995). McLean (1999) asserts that good record management involves among other things the control and creation of records as well as assimilation of new records management technologies. Maintaining business records includes but not limited to entries of day-to-day transactions of business regarding its receipt and payment. It may also include the list of assets and liabilities, number of employees and measurement indicators. However, a basic record keeping system should be simple to use, easy to understand, reliable and consistently designed to provide information of a timely basis. In conventional accounting terminology, these are generally referred to as the qualitative characteristics of financial statements. These characteristics underscore the relevance of accounting and business records, and breaking information down to levels that meet the user requirements of a variety of stakeholders. According to Parker (2000), record keeping is essential to business management. Record keeping involves identification, classification, storage and protection, receipt and transmission, retention and disposal of records for preparation of financial statement. He adds that also included in record keeping are policies, systems, procedures, operations and personnel required to administer the records. Record keeping plays a key role in management of knowledge necessary for good business performance. Modern organizations are concerned with the capture, use and storage of knowledge. In fact over the last decade organizations have attempted to transform themselves into knowledge-enabled operation that are able to tap into the intellectual capital they create to help them learn and develop. Proper record keeping provides evidence of how the transaction was handled and substantiates the steps that were taken in order to comply with business standards. Record keeping is the foundation on which a compliance program should be built upon. Measures should be put in place to capture the documentation and events that take place through a transaction commencing from delivery and payment Reynolds Sarah, (2010). Performance of a business is how well or poor a business is doing via-a-visa owner manager set objectives which is crucial to business’ success. Once a business is not performing well, certain danger signals such as poor profit growths which exhibit themselves (Murray, 1994). He further argues that small business (SB) owners either do not understand the significance of these warnings or tended to optimistically believe that things will get better on their own. Calvin (2000) put it succinctly that, “most small business are myopic”.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to financial record maintenance practice in business establishment
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment, the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on financial record maintenance practice in business establishment. 200 staff of selected SMEs in Ikeja was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was on financial record maintenance practices in business establishment. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of financial record maintenance practices in business establishment.
Summary
This study was on financial record maintenance practices in business establishment. two objectives were raised which included: To determine the general policy concerning information collection processing storage and retrieval measure undertaking by business establishments, to determine the storage facilities for keeping records, if there are adequate care of records in business establishments. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected SMs. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made accountants, human resource managers, customer care officers and marketers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
Insignificant effect between record keeping and SMES performance meaning that there is neglect on record keeping by small enterprises. From the extant literature, it is clear that small enterprises rarely keep accounting records. As such, fail to keep track of transactions of their business activities. The findings therefore necessitate the need for further study on the same so as to establish if the findings hold. This study contributes to knowledge the performance of SMEs research as a result, new constructs, and new multi-item measurement scales for measuring these constructs associated with the performance of SMEs dimensions. The framework of the study provides a foundation for future research, though new constructs may be added to provide in-depth understanding of performance of SMEs theory. This study has contributed the performance of SMEs, which has been fully tested and confirmed
Recommendation
SME owners should appreciate the importance of financial record keeping since it has some utility. By appreciating they should incorporate the practice of financial record keeping among business activities; this will in the end improve their performances
(ii) SME owners should institute a system of financial record keeping that is accurate, reliable, easy to follow, consistent as to the basis used and very simple.
(iii) The study further recommends that SME owners should make a deliberate attempt to improve on the capture and maintenance of financial record overtime. The record captured should be house either when they are semi-active or inactive.
(iv) The studies also recommend training of SMEs owner by organization of business association in areas of record keeping
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