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Business in Africa Pays: Accounting for Business Operations in Nigeria. Dr Olugbenga Coker

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Information about Business in Africa Pays: Accounting for Business Operations in Nigeria....
Finance

Published on February 23, 2014

Author: Gavdaman

Source: slideshare.net

Description

Dr Olugbenga Coker talks to the audience of Business in Africa Pays: Nigeria about protecting your Nigerian business interests through effective accounting.

You can listen to the audio recording of this presentation on our website here:
http://businessinafricapays.com/accounting-for-business-operations-in-nigeria/

Or visit our homepage: http://www.businessinafricapays.com
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Accounting for Business Operations in Nigeria: Opportunities & Challenges Olugbenga Coker PhD FCCA FCA

Introduction - The Nigeria Business Environment High Rate of Unemployment Dependence on Oil Revenue Dependence on Imports Huge Infrastructure deficit Security Concerns Corruption Strong Local Financial Institutions

The aim of Business Profitability; wealth maximisation Profit = Revenue - Cost (Operating, other) Other cost◦ Cost of Compliance ◦ Taxation ◦ Internal Control

Compliance- Relevant legislations • • • Companies and Allied Matters Act The Foreign Exchange Act 1995 – Allows repatriation of profit, dividends, capital, etc The Nigerian Investment Promotion Commission Act 1995 – Established the NIPC to co-ordinate, promote and facilitate domestic and foreign investments into Nigeria except – guarantees that ‘no enterprise shall be nationalized ‘ – Allows 100% ownership – investment listed under the ‘Negative ‘ lists – covered by the Nigerian Cabotage Acts 4 4

Investment Opportunities  Infrastructure  Power – Generation, Transmission & Distribution  Transportation – Rail, Air, Road  Agriculture & Agro Allied  Services  Telecommunication  Health Care Services  Banking & Financial services  Tourism/Hospitality  Education  Waste Management & Treatment  Mineral Mining  Manufacturing  Pharmaceuticals, Textiles & Garments, Automobiles,  Oil & Gas (up-and down-stream operations) 5

The regulatory environment Incorporate local subsidiary or branchRegister with the Corporate Affairs Commission Obtain business permit from NIPC ◦ -14 days/24Hrs Obtain Certificate of Capital Importation for repatriation purposes If manufacturing or exporting - obtain SONCAP certification for products (Standards Organization of Nigeria Conformity Assessment Programme )

The regulatory environment File Annual Accounts with the CAC Nigeria has adopted the IFRS◦ Comparability, consolidation, monitoring Exemption for SMEs: ◦ Turnover < £2m or assets < £0.8m ◦ Foreign companies don’t qualify Availability of professional support ◦ >40,000 chartered accountants (ICAN) ◦ Reasonable cost of compliance

Taxation Enforced by the 3 tiers of GovernmentFederal, State, and Local governments. Collectible ◦ ◦ ◦ ◦ ◦ by the Federal Government Companies income tax; Withholding tax on companies; Petroleum Profit Tax; VAT ; Education tax Personal Income Tax- Non residents Collectible by State Governments: ◦ Pay-As-You-Earn (PAYE) – Residents ◦ Road taxes; Business premises registration 8

Taxation ◦ Companies Tax - 30% ◦ Low VAT regime – 5% ◦ Investment in Infrastructure – may qualify for investment allowance ◦ Capital Allowance for Specific activities ◦ Enforcement- Tax Clearance Certificates ◦ Access to good professional advice 9

Internal Controls Protecting your Assets ◦ Security of Capital ◦ Profitability

Internal Controls What is IC?  Policies & Procedures  Designed by Management to: Safeguard the assets Ensure reliability of financial information Ensure compliance Promote efficient and effective operations.

Internal Controls Why Internal Control is particularly important? ◦ The nature of the business ◦ the social, cultural and legal environment. ◦ Challenges & limitations

Designing Internal Control Systems Do a Risk Assessment  Identify areas of greatest risk  Susceptibility to fraud & error  Information system failure, staff practices  Changes in regulations  Design: Cost proportional to risk Establish the Control Environment ◦ Set the tone-Values; attitude; ethics ◦ Communication, leading by example Specify Control Activities Monitor and Review

Internal Control Activities Preventive & detective  Delegation of authority and responsibility  Separation of duties-transaction lifespan  Record keeping- Cashbook, sales, inventory, fixed assets, payroll  Purchase authorisation-Account payable Revenue, accounts receivable, banking  Personnel policies and procedures  Security- Physical & Technical  Reconciliation- bank; cash-count; stock

Internal Control Issues for Smaller Entities  Owner sets the control environment  Values, diligence, presence  Controls may be informal and carried out by a few persons  The benefit of a control activity should be more than the cost  A code of conduct communicated informally or (preferably) written  Use of company assets; record-keeping; complying with laws; giving and receiving gifts

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