African Journals Online
African Journal of Finance and Management

Abstracts (Volume 8 Number 2)

THE SMALL AND MICRO ENTERPRISE AUDIT IN TANZANIA: IS IT WORTH THE EFFORT?
EVIDENCE FROM AN EXPLORATORY STUDY

Kitindi, E

Abstract: The audit of small and micro-enterprises has, for a long time, been of concern to many academics and practitioners alike. Arguments have abounded as to whether the small enterprise audit was worthwhile or not. Though both views existed, it was apparent that small enterprise auditors did face problems in the small audit, albeit in different forms and magnitude. Some countries allow small enterprises to go unaudited. In the UK, a financial reporting standard for smaller entities has been promulgated in an attempt to mitigate some of the problems.

This paper presents findings of an exploratory study conducted in Tanzania in relation to problem met by small and micro-enterprises auditors. The study was motivated by the fact that, whereas elsewhere the small audit problem is apparent and being dealt with in various ways, in Tanzania there is an apparent lack of knowledge to any problems and their effect on the auditor's work. The study thus sought, inter alia, to confirm the existence of small audit problems, the nature of their incidence, and their impact on the audit work. This was done by soliciting responses to a number of potential audit problems. The results suggest that most of the problems investigated did not occur frequently although some were significant to the auditor's work. A tentative conclusion is that, though small enterprises in Tanzania have similar characteristics to those elsewhere, the incidence of SME audit problems is perceived differently in the country.

Key words: internal controls, small and micro enterprises, auditing standards, accounting standards.



EFFECTS OF MERGERS AND ACQUISITIONS TO SHAREHOLDERS' WEALTH: EVIDENCE FROM UNITED KINGDOM

Mutaitina, Oswald R

Abstract: This paper sets out to empirically analyse the impact of mergers and acquisitions on shareholders returns. it uses the U.K. data for 60 companies that were involved in takeovers in the period between 1992-95. The paper assesses stock market response to the announcement of takeover bids for these randomly chosen successful bids in order to establish whether or not it is indicative of gains from mergers. The study finds that there are significant abnormal returns earned by shareholders of the target firms on the month the merger is announced. In contrast, the returns earned by stockholders of the bidding firms were found to be modest. Regarding the post-event study for bidding forms, given the predominant paradigm in finance (i.e., capital market efficiency), the study shows that takeovers have some impact on the stockholders wealth. The paper argues however that despite such negative returns, there no necessary implications of market inefficiency based on the speed with which the information about merger is impounded in the share prices of the bidders.



THE TIMELINESS OF THE BOTSWANA PARASTATAL ANNUAL REPORTS: 1994-1998

Dominick S. Iwisi and Ernest G. Kitindi

Abstract: The corporate annual report is commonly used by business entities to convey information to interested persons. An important component of the report are the financial statements and the auditors report. Since the report is a primary source of information for shareholders, it is desirable that this information is provided on a timely basis. The report should also be of a quality, desirable for meaningful decisions to be made.

This study investigated the time it took parastatals in Botswana to have the annual report available. It also embarked on establishing the quality of the accounts, as indicated by the auditor's opinion report. The results suggest that on average, the Botswana parastatal required 5.35 months to avail the report. This compares unfavourably to other developed countries. However, compared to some other developed countries, the results for Botswana parastatals are impressive.

Key words: Timeliness, Annual reports, Parastatals, Audit reports.


MATCHING MANAGERIAL SKILLS AND BEHAVIOUR WITH BUSINESS STRATEGY - REVISITED

Edward D. Mwanjabala

Abstract: The burgeoning literature on matching managerial skills to business strategy is a testimony to the fact that people now recognize the increasing importance of human resources in creating value and sustaining the competitive advantage of a firm. In the light of this, could employers in Tanzania follow this approach? This paper looks at the selection methods used by organisations in Tanzania and models of matching managerials skills to business strategy advocated by a number of authors. The paper then concludes that matching a manager to a business strategy needs learning. However managerial characteristics are difficult to change as business change. At best the matching concepts suits manual and technical jobs.



AN APPLICATION OF THE TRANSPORTATION MODEL IN THE DISTRIBUTION OF UHT MILK:
The Case of Kenya Co-operative Creameries Ltd.

Dr. Issac M. Mbeche and Lagat C.K.

Abstract: This paper, using data from factories and depots of KCC that handle UHT milk, develops a model for the optional allocation of milk from factories to the depots in various parts of Kenya. In developing of this model, the paper takes into consideration the characteristics of individual depots, such as access roads, demand, storage capacities and KCC's distribution policy. By use of a case study approach, a transportation model is developed. It shows how distribution costs can be reduced through the use of Operations Research (OR) models. However, given the structure of the industry, the paper suggests that there should be an integrated transportation model that would analyse the allocation of products to individual depots while minimising both transport and storage costs.


GROWTH AND STRUCTURE OF TANZANIAN'S INDUSTRIAL SECTOR INVESTMENT AND
EMPLOYMENT

Dr. Joseph Shitundu

Abstract: Tanzania like many other Sub-Saharan African countries is facing a formidable challenge of creating many employment opportunities so as to be able to absorb, each year, about 700,000 new entrants going into the job market or about 200,000 individuals who seek wage employment every year. Industrialization is one of the ways which can help in dealing with this problem. Indeed the experiences of South-East Asian countries show that industrial growth can contribute to the creation of employment opportunities in a sustainable manner. Tanzania's experience, however, show that the relatively high output growth achieved during reforms since the mid 1980s have not resulted into such increased employment creation. This situation is probably a reflection of the fact that the growth momentum achieved in Tanzania is either inadequate or does not come from investment directed into the labour intensive activities. This paper asserts that in order for the industrial sector to contribute substantially and in a sustainable manner to employment creation in Tanzania then, first the rate of industrial investment must be increased and secondly the pattern of industrial investment must be directed to labour intensive and agro-based industrial activities. Tanzania being basically an agricultural country such investment will have a multiplier effect in terms of employment generation partly due to the linkages effects which such industries might have to the rest of the economy.


THE IMPACT OF REGULATION AND SUPERVISION COMPLIANCE COSTS TO FINANCIAL
INSTITUTIONS IN TANZANIA

Satta, T.A.

Abstract: The role of banks and financial institutions in an economy is to provide means by which funds can be transferred from surplus units in the economy to deficit units. While playing this role, these institutions need to be regulated and supervised in order to have safe and sound banking systems. If not well implemented, however, these regulations entail substantial costs, which ultimately affect the banking system's efficiency. This paper examines whether or not supervision compliance costs are significant by applying regression analysis to the collected primary data. The results confirm the hypothesis that there is a negative relationship between bank earnings and compliance costs. This relationship is, however, found not to be strong. The computed coefficient of determination indicates that compliance costs represent about 3% only of the bank earnings variation in the country. This implies that a large proportion of the variation is explained by other variables.