ABSTRACT

The research work “The impact of Financial Accounting Reporting on the corporate performance of Business Organization”, basically aims at ascertaining how financial accounting reporting has helped in advancing the objectives of corporate organizations. In the process, it investigates the effects that financial accounting bears on the performance of a business. Furthermore, it sought to ascertain the compliance of relevant statues by corporate organization and the overall satisfaction of stakeholders in a corporate organization. The study obtained its data basically from primary and secondary sources. The primary sources of data collection employed were questionnaire interviews and observations, while the secondary sources of data included textbooks, journals and a five years annual financial report of the Nigerian brewery plc. In the analysis of the data collected, the chi-square was used to analyze the responses gathered. The study revealed that a lot of problems were inherent in financial reporting ranging from non-disclosure of vital information, subjective judgments of preparation of the financial statement and most times non-compliance to relevant statues. There were recommendations given such as strict compliance to the relevant statutes were made to the company, the government needs to strengthen its regulatory agencies in order to ensure that the financial statements show a “true and fair view and comply with the relevant statues at all times.

TABLE OF CONTENTS

 

TITLE PAGE                                                                                           i

CERTIFICATION                                                                                              ii

DEDICATION                                                                                        iii

ACKNOWLEDGEMENT                                                                                       iv

ABSTRACT                                                                                             v

TABLE OF CONTENT                                                                              vi

LIST OF TABLES                                                                                   vii

 

CHAPTER ONE: INTRODUCTION                                                                       

1.1         BACKGROUND OF STUDY                                                              1

1.2         STATEMENT OF THE PROBLEM                                                      3

1.3         OBJECTIVE OF THE STUDY                                                            4

1.4         RESEARCH QUESTIONS                                                                 4

1.5         STATEMENT OF RESEARCH HYPOTHESES                                          5

1.6         SIGNIFICANCE OF THE STUDY                                                       6

1.7         SCOPE AND LIMITATIONS OF THE STUDY                                        7

1.8         DEFINITION OF TERMS                                                                8

 

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1     OVERVIEW OF THE FINANCIAL ACCOUNTING SYSTEM                       10

2.2     FINANCIAL ACCOUNTING RECORDS                                                          10

2.3     THE SUBSIDIARY BOOKS THE GENERAL JOURNAL (PROPER)                12

2.4     SOURCE DOCUMENT                                                                     16

2.5     THE LEDGERS                                                                              18

2.6     CLASSIFICATION OF ACCOUNTS                                                    18

2.7     THE TRIAL BALANCE                                                                    19

2.8     THE PROFIT AND LOSS ACCOUNT                                                   19

2.9     THE STATEMENT OF FINANCIAL POSITION                                                20

2.10    PRINCIPLES AND ASSUMPTIONS UNDERLYING FINANCIAL ACCOUNTING       20

2.11    ACCOUNTING STANDARDS                                                            27

2.12    CONTROVERSIAL ISSUES IN FINANCIAL ACCOUNTING REPORTING     31

2.13    CROSS SECTIONAL ANALYSIS OF THE SELECTED COMPANY                36

 

CHAPTER THREE: RESEARCH METHODOLOGY

3.1     RESEARCH DESIGN                                                                       38

3.2     AREA OF STUDY                                                                          38

3.3     POPULATION OF STUDY                                                               39

3.4     SAMPLE AND SAMPLE TECHNIQUES                                                 40

3.5     SOURCE OF DATA                                                                        40

3.6     METHOD OF DATA GENERATION                                                    41

3.7     RELIABILITY OF INSTRUMENT                                                       42

3.8     VALIDATION OF THE INSTRUMENT                                                 43

3.9     DATA ANALYSIS TECHNIQUES                                                       43

 

CHAPTER FOUR: FINDINGS

4.1     ANALYSIS AND PRESENTATION OF DATA/RESULT                             44

4.2     TEST OF HYPOTHESIS                                                                  50

 

CHAPTER FIVE: DISCUSSION OF FINDINGS

5.1     DISCUSSION                                                                               57

5.2     SUMMARY OF FINDINGS                                                               59

 

CHAPTER SIX: CONCLUSION AND RECOMMENDATIONS

6.1     CONCLUSION                                                                              61

6.2     RECOMMENDATIONS                                                                    62

6.3     SUGGESTIONS FOR FURTHER STUDIES                                           63

REFERENCES                                                                                                           64

APPENDIX I                                                                                                              66

APPENDIX II                                                                                                       70

 

 

LIST OF TABLES

TABLE I: The accuracy and the fundamentals that guide the preparation  of the Company’s financial report.                                                            43

                                                                                                                                                                    

Table II: The financial reports meet the needs of its various users            45             

 

Table III: The influence of the financial report on other business Performance.    46  

Table IV: The possible suggestions and recommendations based on

                the  findings of the study                                                 48

                                                                   

                                                                                                                                            

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

The impact of financial reporting on the corporate performance of a business organization is becoming more apparent to user groups of a financial statement.

       Accounting is a not an exact science neither are business operations without some subjective and judgmental errors when it comes to reporting them. A financial reporting therefore is a document statement which informs the various interest groups to a business on the operations and performance of their business in a period under review its present state of affairs as well as its anticipated future, in accordance with the statutes. If a financial report is to serve its purpose it ought to be characterized by the following: Relevance, Understandability, Reliability, Completeness, Objectivity, and Timeliness. (Igben, 2003).

       In the accounting process of an organization is to provide the information required to prepare a financial report which shall have the above characteristics then the transaction during the period must be recorded promptly by and accurately and interpreted in conformity with the Generally Accepted Accounting Principles (GAAP), Statements of Accounting Standard Board (NASB), International Accounting Standard committee and the companies and Allied Matters Act cop LFN (CAMA).

       Financial accounting reporting become necessary with the obvious need for accountability of stewardship from the managers to whom investors entrusted their financial resources. The Railway age in the UK. Occurred between 1830 to 1870 and for the first time the world same the emergence of multimillion corporations with large numbers of shareholders. It was a period of disorder but it brought the basis for the present day system of corporate financial report. Financial reporting is a duty of stewardship assigned to the directors of a company by section 334 of the company and Allied Matters Act Cap L20 LFN, equally the mandatory responsibility of companies to keep accounting records derives its strength from section 331 and 382 of the same act. These sections explicitly defined the necessary content and manner in which financial records should be kept. 

 

1.2     STATEMENT OF THE PROBLEM

       Most business organization exists with out proper accountability. This has in many ways led to the downfall of the business. Not withstanding this fact, in Enugu urban area, large business organizations like Nigerian Breweries plc has gained numerous advantages from customers, shareholders and the government of the state at large. Despite these numerous advantages, the organization still encounter some problems which might include either of the following: planned or unplanned expenditures, damages of both finished and unfinished goods, miss management of company’s fund etc. The sources of the above listed problems can come from the taxes, accidents and embezzlement respectively. The above listed problems could hamper the progress of a business organization when there is poor financial accountability in the company. Therefore, after examining the implications of the above mentioned problems, the researcher decided to take the task of exploring and revealing the impact of financial accounting reports on the corporate performance of business organization in Enugu urban area, Nigerian Breweries plc specifically.

1.3     OBJECTIVES OF THE STUDY

        A standard financial accounting report has a lot of impact on the corporate performance of business organization like the Nigerian breweries plc. Therefore, the purpose of this study intends to critically examine the impact of financial statement on the corporate performance of the selected company and to probe into the fundamental for their preparation as well as its presentation with a view to determining:

a. The accuracy and the fundamentals that guide the preparation(s) of the company’s financial reports.

b. The degree to which the company’s financial report meets the needs of its various users.

c. The influence that financial report has on the business performance(s)

d. Finally, to present suggestions and recommendations based on the findings.

1.4     RESEARCH QUESTIONS

In order to determine the impact of financial reporting on the corporate performance of business organizations, the following research questions were drafted to guide the study:

1.  What are the accuracy and the fundamentals that guide the preparation(s) of the company’s financial reports?

2.  Does the company’s financial report meet the needs of its various users?

3.  What influence has the financial report on the business performance(s)?

4.  What are the possible suggestion and recommendations based on the findings of the study?

1.5     STATEMENT OF RESEARCH HYPOTHESES

       The following null and alternative hypothesis shall be tested in this research works:

1. Ho: The information provided in financial statements is adequate to support good decision making.

     Hi: The information provided in financial statements is not adequate to support good decision making.

2. Ho: The disclosure requirements of statements affect corporate performance positively.

     Hi: The disclosure requirements of statements do not affect corporate performance positively.

3. Ho: corporate organizations comply strictly to the statutory     regulations.

   Hi: Corporate organizations do not comply strictly to the statutory regulations.

4. Ho: Financial reports meet the needs of the various users of financial information.

    Hi: financial reports do not meet the needs of the various users of financial information.

 1.6    SIGNIFICANCE OF THE STUDY

       This researcher has embarked on this work to examine the financial reports of the selected company and probe into the fundamentals for their preparation as well as its presentation. The findings of this study will be very useful to the following group:

THE POTENTIAL INVESTORS: These are groups who are interested in committing their financial resources to the buying of the company’s shares. These set of people will benefit from this study as the result of this study still arm them with the necessary tools with which to evaluate the financial report of a corporate organization as it affects them.

THE GENERAL PUBLIC: This group shall benefit from this report by the knowledge that the business organization exists for them and not against them, as such has to live up to its full responsibilities.

THE REGULATORS OF FINANCIAL ACCOUNTING REPORT: This group includes the Nigerian Accounting Standard Board (NASB), the companies and Allied Matters Act 2004 Cap (20 LFN (CAMA) the

Banking and Other Financial Institutions Act of 1991 (BOFIA), prudential guidelines for licensed Banks. The Insurance Act 2003. The study will help them to standardize and harmonize their operations.                                   

THE EMPLOYEE GROUP INCLUDING EXISTING: Potential and past employees. The Government Including Tax Authorities Department who have Interest in the Financial Reports of Companies: The result of this work shall be of immense assistance to each to these user groups in the advancement of their interest.

1.7     SCOPE AND LIMITATIONS OF THE STUDY

        This study could have covered the impact of financial accounting reporting on corporate performance of all the sectors of the Nigerian economy but due to the challenges of such a task especially the financial resources with which to execute it, it is limited to brewery industry. The study used the Nigerian Breweries plc, Enugu.

The limitations encountered by the researcher of this work are given as follows:

a. The researcher was unable to reach all the members of the sample as a result of their frequent travels and busy schedule.

b. The sample used in the research though representative but it is relatively small compared to the population, as a result of lack of financial with which to carry out the research on a greater sample.

1.8 DEFINITION OF TERMS

AUDITOR: a person who is qualified to examine the accounts of an organization to see that they are in order.

BALANCE SHEET: a business as at a specified date.

BANK: a financial institution whose responsibilities among others is to keep deposits for their client and customers.

GOVERNMENT: an institution of the state whose responsibility is to maintain law and order in the society.

PRIMA FACIE: sufficient to establish something legally until disprove later.

RESEARCHER: an enquiring basically concerned with search knowledge.