The relationship existing between the Kenyan practicing accountant and his small business client
Wamae, Wangui J.G
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The main objective of this Project is to assess the nature of services that the Kenyan practicing accountant extends to his small business clients, and establish whether the services need improvement. . The need for improvement is assessed through trying to establish whether there is a difference between what small scale businessmen need in areas relating to proper financial management for their businesses and what they get from their external accountants in form of accounting services. The main thrust of the study is towards establishing whether there is a difference that could lead to the suffering of the image of the accounting profession in Kenya. Three main groups of respondents are involved in the study viz: accounting firms, small scale businesses(traders and industrialists), and three organizations having close relationships with small business. The three organizations are the Kenya Industrial Estates Ltd., the Industrial and Commercial Development Corporation and the Kenya National Chamber of Commerce and Industry. Personal interviews were conducted with businessmen, in an attempt to assess the nature of services they receive from accounting .firms, businessmen's weaknesses in using information contained in their accounts and weaknesses in maintaining proper records for their businesses. Questions relating to services that are available from accounting h.l'ms were directed to the businessmen and accountants, basically to obtain a picture of what among the services listed small businessmen receive or seek from their accountants. The three organizations were asked for views on various issues relating to weaknesses of small businessmen in management, their needs, and the nature of services small businessmen receive from accounting firms. Almost all registered Kenyan Small Scale businesses have established relationships with accounting firms. Small Scale businessmen engage accounting firms mainly to prepare annual accounts and handle tax returns. Accounts prepared are not really directed towards providing information vital for improved management, but mainly to support tax returns. Poor financial management exists in many of these Small Scale businesses. At present, there seems to be no evidence to suggest that the Kenyan Practicing accountant shares a significant blame for the poor financial management in small business. Results suggest that the blame is almost entirely on the businessmen, and the accounting professions' image appears to be clean. However, it seems that potential exists for extension of extra services to Small business by accounting firms especially in areas relating to Management Services. The accountants should also be prepared for more scrutiny into the services they render to the more educated and vibrant future Small business Community. The project is in five parts. The first part contains an introduction to the study, objective of the study and need for the study. The second part provides a theoretical framework, concentrates on a review of distinguishing features between big and Small business, which give rise to the special problems facing small business, and the kind of services that are available from accounting firms and are essential for proper management. Details on the research methodology appear in the third part, and results presented under three subheadings in the fourth part. Tables containing the data that support the results, and the questionnaires used in the survey are appended at the end of the study. The study is summarized and concluded in the fifth and final part.