The rate of small business attrition and collapse is legendary in Nigeria, in spite of the considerable latitude the government has provided to them over the years to secure their continued operation. Many theories have been advanced to explain this anomaly. None has been sufficiently in-depth as to help shed light on how the accounts and records are kept and maintained and how failure in this segment could be a major contributor to the decline. This paper explores the usefulness of innovative accounting and auditing as a panacea for streamlining small business practice in an enterprising part – often referred to the “Asian Tiger” – of South East Nigeria. Using exploratory and survey research design, the paper documents that the rate of decline and failure of small businesses could be significantly reduced if small businesses were subject to very scrupulous audit by licensed and certified government auditors. The cost of these audit work could be borne by the government in the first instance and then transferred to the small businesses as their fortunes rise. The outcome of this paper has implications on policy formulation and regulation to secure improved business fortunes and hence further drive the frontiers of economic development in Nigeria as a whole.
Background of the Study
For a long time, economic development experts have relied heavily on large enterprises by extending tax breaks, financial incentives, and other inducements as a major strategy for advancement. Increasingly, however, there is evidence that these traditional approaches to economic development are being abandoned. Kelly (2007) posits that the trend now is to build businesses from the ground up and supporting the growth of existing enterprises. This approach has two complementary features. The first is to develop and support entrepreneurs and small businesses. The second is to expand and improve infrastructure and to develop or recruit a highly skilled and educated workforce. Both efforts largely depend on improving the quality of life in the community and creating an attractive business climate. The reason for the shift in approaches is not farfetched. Experience suggests that economic development strategies aimed at attracting large firms are unlikely to be successful or successful only at great cost. For instance, the extension of tax breaks to large firms, financial incentives, development of financial education program, etc. Smokestack chasing can be especially costly if it generates competition for firms among jurisdictions (Kelly, 2007). Further, because of purported job creation role and innovative prowess of entrepreneurs and small businesses, creating an environment conducive to many small businesses may produce more jobs than trying to lure one or two large enterprises. The hope is not only that new businesses will create jobs in the local community, but, through innovation, some new businesses may grow into rapid-growth “gazelle” firms, which may spawn perhaps hundreds of jobs and become industry leaders of tomorrow.
This article evaluates this shift in economic development strategies. The first section describes traditional economic development strategies. The second section explores the role that small businesses play in creating jobs. The third section evaluates how small audit skills could be deployed as an innovative tool for fast tracking small business development in South East Nigeria. The overarching question is whether promoting entrepreneurship and small businesses makes sense as an economic development strategy.
Objective of the Study
The general objective of the study is to explore the usefulness of innovative accounting and auditing as a panacea for streamlining small business practice in South East Nigeria.
The specific objectives are to:
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