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The Role Of Accountant In The Project Evaluation In The Oil Sector (a Case Study Of Shell Petroleum Development Company, Portharcourt)

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THE ROLE OF ACCOUNTANT IN THE PROJECT EVALUATION IN THE OIL SECTOR (A CASE STUDY OF SHELL PETROLEUM DEVELOPMENT COMPANY, PORTHARCOURT)

 

ABSTRACT

This project work centres on the “Role of an accountant in project evaluation in the oil sector”. The objectives of this research work are to know whether project evaluation process have a better cash flow stream, to know what extent has project evaluation helped the oil sector and finally know if project evaluation and selection has improved the sector. In the course of this study, the researcher decided to use simple random sampling. The population of the study consist of 200 management staff as well as board of directors and a simple size of 100 was selected through random sampling method. The primary data collected were analyse using table schedule arithmetic differences in figure simple rate and also simple percentage. The finding reveals that project evaluation is a strong instrument for obtaining ivan from bank and other financial institutions. It further shows that the accountant uses project evaluations in project selection to make best project selection, in addition to choosing the best cash flow, it also provide the accountant  with the best investment option in a company. Some of the recommendations are that the accountants should carry out project evaluation in every industry. Also is that they are advised to master the use of Net present value (NPV) technique in evaluating a project since it improves the time value of money. Further research on the topic is highly recommended as no knowledge is a waste.

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS

Title page

Approval page……………………………………………………………..…i

Dedication …………………………………………………....…………..…ii

Acknowledgement……………………………………….......…………..…iii

Abstract………………………………………........................…………..…iv

Table of contents………………………………………........................…….v

CHAPTER ONE

1.0     Introduction ………………………………………..........................…1

1.1            Background of the study ………………………………………......…1

1.2            Statement of problem………………………………........................…2

1.3            Objective  of the study…………………………………..................…3

1.4            Significance of the study………………………………...................…4

1.5            Research Question ………………………………............................…4

1.6            Formulation of Hypothesis……………………………....................…5

1.7            Scope of the study……………………………….............................…5

1.8            Brief history of shell petroleum development Company of Nigeria Limited (SPDC) ………………………………...............................…5

1.9            Definition of terms ……………………………….......................... …7

 

CHAPTER TWO

2.0     Literature Review ……………………………….......................... …..9

2.1            Research Question / Hypothesis theories…………………………..…9

2.2            Current literature in theories mode Hypothesis and Research Question ...11

2.3            The scope and nature of project evaluation ……………….………..13

2.4            Cash flow implication and project evaluation ………………………15

2.5            Corporate goal and investment decisions……………………………16

2.6            The Role of the Accountant in project evaluation…………………..18

2.7            The oil sector and project Evaluation……………………………….20

2.8            Summary of the literature review……………………………………21

CHAPTER THREE

3.0     Research Methodology……………………………………………..25

3.1            Design of the study …………………………………………………25

3.2            Area of the study…………………………………………………….25

3.3            Population of the study……………………………..……………….25

3.4            Sample method…………………………………………………….25

3.5            Instrument for data collection ………………………..……………..26

3.6            Validity of Reliability ……………………………………………....26

3.7            Distribution and retrieval of instrument…………………………….27

 

CHAPTER FOUR

4.0     Data presentation and Analysis ……………………………………29

4.1            Analysis of data……………………………………………………29

4.2            Test of Hypothesis ………………………………………………….32

CHAPTER FIVE

5.0     Summary, conclusion and Recommendation………………………..41

5.1            Summary of findings …………………………………………..……41

5.2            Conclusion ………………………………………………………….41

5.3            Recommendation …………………………………………………...42

5.4            Limitations to the study……………………………………………...42

References………………………………………………..………….44

Appendix A ………………………………………………..………..46

Appendix B………………………………………………………….47

Questionnaires ……………………………………………..………..48

 

 

 

 

 

 

 

 

 

CHAPTER ONE

1.0     INTRODUCTION

1.1     BACKGROUND OF THE STUDY:

Project evaluation is of dual approachies vis-à-vis project and evaluation. Project has to do with investment decision which most of these decision have direct effect in future profitability of the organization either because they will result in an increase in revenue generation or they will bring about an increase in efficiency and cost effectiveness.

          In the other hand, evaluation has to do with the analysis of the investment to see whether it will be worth while to take decision on it to go ahead with project’s expenditure.

          According to Aguolu, P.S.O (1997:6), investment decision are the use of funds on long term asset. What is needs in investment should be known before financing decision are to be taken. “A peculiar aspect of these is that they involve future benefits which are in many cases difficult to predict”. The investment decision of a firm are commonly known as “capital budgeting or capital expenditure decision”.

          Aguolu, P.S.O, (1997:70) “states that capital budgeting decision is that financial decision which involves and outlays of funds in the present time with the expectation of future returns over a period of time”. He further sees project evaluation as one of the capital budgeting processes.

          On this note, the accountant plays the role of evaluating the suitability and adaptation of the project in relation to profit maximization.

Also in evaluation, the project is expected to be measured on incremental basis what determines. The acceptance of a project is it’s changes (positive in the firms revenue, cost and tax strems). In constrast, cash flow that would be changed by the investment should be degraded.

1.2     STATEMENT OF PROBLEM

As a technical and creative aspect of human endeavour, project evaluation requires knowledge, experience and all the skills needed by a manager to perform job effectively. The accountant’s competence in project evaluation during his choice of a project for the organization is very significant.

          In a free market economy, it is generally delivered that the investors pays for an investments or intrinsic value. The problem here is how can the accountant relate the future cash flow, the expected returns and the degrees of risks associated with the investment to the market economy.

          Another problem the accountant may be faced with is the calculation formula, he will effectively use the evaluation formula so as to rationalize between theory and practice. These constraints will help us to investigate

 

 

 

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