ABSTRACT
This researcher work sought to evaluate the sourcing and application of funds on Commercial Banks in Nigeria using Access Bank Plc Ogui Road, Branch Enugu as a case study. The importance of prudent sourcing and application of funds in every business enterprise particularly the banking industry cannot be overemphasized. It is in this regard that the researcher went about his quest. The researcher employed the personal interview. Observation and documentary instrumentations in data collections.
From the information and data sources, via the bank financial statements and records, the researcher was able to find out that though, the bank maintaining a sound sourced and application of fund policy, they still need to do more in view of the fact that sourcing and application of funds is a going process which needs to be reviewed and restructured from time to time to meet the yearning for prudent financial management and growth. The researcher therefore is of the view that the bank management should evolved better deposit, lending and other like financial services policies such that the bank is able to provide the desired services to the public and other economic units and also ensure prudence, particularly in its lending sourcing and application of fund generally.
CHAPTER 1:
INTRODUCTION
Background of the Study
The sources of funds in an organization denotes the various ways in which cash inflows to operate the business is realized. The followings are some of the ways cash came into a business:
– Through an increase in liability
– Through an increase in net worth
– Through a decrease in asset
– Through a net profit after tax
– Through sales of shares, preferred or common stock.
It also snows ways how an extra money comes into the organization through consultancy services, borrowing in form of loan. Summarize sources of funds to any organization devotes all the ways money comes into an organization for its operational utilization and for achieving its stated goals and objectives. However for an organization to thrive well it must also spent money to achieve it stated goals and objectives, thus application of funds refer to the various ways the sourced funds are put to usage in order to increase the value of fixed or working capital.
The followings are the various ways funds can b e put to use;
– Where there is an increase in assets?
– Where there is a decrease in liability?
– Where there is a payment of cash dividend?
– When shares are purchased?
– Where there is a decrease in Net worth?
Having explained the meaning of sources and application of funds in a financial institution, it will be good to see what accounting bodies says about the same subject matter.
The Accounting Standard Steering Committee (ASSC) in their Standard Accounting Practice No. 10 (ASSAP 10) requires that all firms with an annual turn over of gross income of N25,000 or more should produce funds statement. In its explanatory notes it describes the statement and principles underlying its preparation as follows.That the profit and loss account and the balance sheet of a company should show the amount of profit during the year, and the disposition of the company’s resources at the beginning and the end of that year. But for a more understanding of the company’s affairs, its necessary to identify the movement of assets, liabilities and capital which have taken place during the year and the effect of such movements on the net liquid funds.
The above statement is not specifically stated in the balance sheet or profit and loss accounts but rather can be made available in form of statement of sources and application of funds (fund statement). Though the fund statement is in no way a replacement for the profit and loss account or the balance sheet, but yet it contain in summary form the information contain in the two above. The objective of such statement is to show the manner in which the operations of a company are financed and the format selected should be designed to achieve this objective.