study examines the impact of accounting standard on financial reporting on
Nigerian financial institutions. The broad objective of the study is to
ascertain if there is relationship between accounting standards and the content
and presentation of financial statements and also to find out if financial
reporting information has a positive impact on the effective management of
Nigeria banks. The local standards do not cover all the aspects of financial
reporting encountered by prepare of financial statements. The random sampling
technique was used in selecting a sample size of l4 banks out of all banks
quoted on the Nigeria Stock Exchange as at third quarter of 2015. The survey
design was adopted in this study and a total number of 50 questionnaires were
administered but 47 copies were returned completely. The t-statistics was
adopted in carrying out the analysis of data. From the analysis of data
collected, the result reveals that there is a positive relationship between
accounting standards, its contents and presentation of financial statement in
the banking sector. It is concluded that accounting standards have improved
Nigerian banks on how they can prepare financial statement and presents it in
line with the Companies and Allied Matters Act (CAMA) 2004 and other relevant
accounting standards (IAS and SAS). Based on these findings, some
recommendations among others were made that proper accounting standards be put
in place by the relevant accounting standard setting bodies so as to ensure the
preparation of high quality financial report or statement in the Nigeria
TABLE OF CONTENTS
Title Page i
Table of Contents vi
One: Introduction 1
Background to the Study 1
Statement of Problem 5
Research Questions 5
1.4 Objectives of the Study 6
Statement of Hypotheses 6
1.6 Significance of the Study 8
of the Study 8
Limitations of the Study 9
Definition of Terms 10
Two: Review of Related Literature 11
2.1 Introduction 11
2.2 The Financial Reporting Council of Nigeria (FRCN) 11
2.2.1 Objectives of Financial Reporting Council of
Nigeria (FRCN) 12
2.2.2 Membership of Financial Reporting Council of
Functions of the Financial Reporting Council of Nigeria (FRCN) 14
2.2.4 Appointment of the Chairman of
FRCN Board 14
2.2.5 Powers of the Council 17
International Accounting Standard
Committee (IASC) 20
2.3.1 Why are
International Accounting Standards necessary in Nigeria? 25
2.4 International Financial Reporting Standard 27
of Adoption of IFRS 28
Challenges to the Adoption of
2.4.3 Emerging Countries Challenges 30
Role of the Users of Financial Statements in the Development of Standards 30
2.6 Financial Reporting: Meaning of Financial
of the Financial Reporting 32
Characteristics of Reporting 33
True and Fair View/Fair Representation 36
Element of Financial Statement 36
2.11 Users of
Accounting Information and their Information Needs 37
Methods and Design 41
3.2 Research design 41
Description of the Population of the
3.4 Sample Size 42
Sampling Techniques 42
Sources of Data Collection 42
Method of Data Presentation 43
3.8 Method of Data Analysis 43
Chapter Four: Data Presentation, Analysis and Hypotheses
Presentation of Data 44
4.3 Data Analysis 45
4.4 Hypotheses Testing 57
Five: Summary of Findings, Conclusion and
5.2 Summary of Findings 60
Background to the study
335(l) of the Companies and Allied
Matters Act CAMA 1990 as amended stipulates that the preparation of financial
statement, shall comply with the accounting standards’ issued from time to time
by the Nigeria Accounting Standard Board.
statements are described as the end product of accounting transactions or
economic events aimed at providing qualitative and quantitative financial
information to evaluate and predict the performance of an organization to
permit informed judgment and decision making, (Illaboya, 2005).
Nigeria, the standard setting body was the Nigeria Accounting Standard Board
(NASB) which is presently referred to as the Financial Reporting Council of
Nigeria (FRCN) which was passed into law On 18 May 2011 and was signed into law
on 20 July 2011. The financial reporting council of Nigeria like all standard
setting bodies in the world is independent of the profession of accounting. The
council identifies areas where a measure of uniformity is required so as to
bridge the variation in reporting practices and ensure a high level of
uniformity which is panacea to
need for an accounting standard setting body in Nigeria became urgent when the
Nigeria enterprise promotion decree was promulgated to transfer ownership of
companies to Nigerians. Foreigners exploited the lack of uniform accounting
procedures in valuing their equities in companies affected by the decree. Those
companies, whose parents were resident outside Nigeria, followed the dictate of
their parents. At the end of it all, there were as many accounting practices
reflected in the account as there were companies in Nigeria (Nnadi, 2007).
an auditor challenged a company on the appropriateness of its accounting
practices, management was usually quick to as the auditor to produce the law
prohibiting such practice. The Nigeria accounting standard board presently
known as the financial reporting council of Nigeria was therefore established
in order to ensure that these conditions did not persist, (Nnadi, 2007).
Nigeria accounting standard board (NASB) presently referred to as Financial
Reporting Council of Nigeria (FRCN) has been the body responsible for
establishing standards of accounting and reporting in the Nigeria business
enterprises. The board help to ensure that the published financial statements
are uniform in content and format and communicate precisely what they purport
to convey. These standards are in effect rules governing the preparation of
financial statements. Accounting standards issued by the board are essential
because they lead to efficient allocation of resources in the economy such that
more successful companies are better able to raise capital to finance their
operations than the less successful one.
development of new accounting standards involves a long process usually
referred to as “due process”. The due process ensures that all interested
parties get the chance to make some contributions towards the proposed
standards. The process begins with the selection of an area of accounting to be
standardized. An accounting problem must be sufficiently significant in terms of
its effect on the financial statements. If problems do not create significant
difficulties, the cost of the due process may be justifiable. Any individual or
organization can write to the financial reporting council (FRC) to suggest an
issue for standardization (Nnadi, 2007).
standard is a statement issued by the appropriate standard setting body locally
or internationally on a specific area or topic in financial accounting, the
acceptance and application of which is mandatory for prepares and users of
financial statement, (Igben, 2004).
standards are issued at the international level by the International Accounting
Standard Committee (IASC) while they are issued in Nigeria by the financial
reporting council of Nigeria. The standards issued by the (IASB) are known as
international accounting standard (IAS) while those issued by the (FRCN) are
known as statement of accounting standard presently know as International
Financial Reporting Standard (IFRS). Both IAS/IFRS are applicable except that
if an IAS is inconsistent with an SAS, the IAS/IFRS would be inapplicable to
the extent of the inconsistency. This implies that on any matter on which an IAS
and an SAS make conflicting pronouncements, the SAS shall supersede the IAS in
Nigeria (Igben, 2004).
Statement of Problem
national accounting standard (SAS) is partly based old IAS, some of which have
since been amended or withdrawn by IASB. Furthermore, the local standards do
not cover all the aspects of financial reporting encountered by prepare of
financial statements. We think it is fair to admit that our standards are partly
out of date and are not sufficiently comprehensive to form a basis for the
preparation of high quality financial statements.
In order to achieve the objective, the following
research questions are asked:
1. Is there any relationship between
accounting standard and the content and presentation of financial statement?
2. Does financial reporting information has a
positive impact on the effective management of Nigeria banks?
3. Does the neglect of financial reporting information
have effect on the banking activities?
Objective of the study
The broad objective of this study is to find out the
impact of accounting standards on financial reporting in Nigerian banks. The
sub-objectives are to;
1. ascertain if there is relationship between
accounting standard and the content and presentation of financial statements,
2. find out if financial reporting information
has a positive impact on the effective management of Nigeria banks,
3. determine if neglect of financial reporting
information have effect on the banking activities.
1.5 Statement of hypothesis
following hypotheses are formulated in null (HO) and alternative (HI)
There is no positive relationship
between accounting standard and the content and presentation of financial
HI: There is a positive
relationship between accounting standard and the content and presentation of
Ho: Financial reporting information has a negative
impact on the effective management of Nigerian banks.
HI: Financial reporting information has a
positive impact on the effective management of Nigeria banks.
Ho: Neglect of financial reporting information will not
have any effect on the banking activities.
HI: Neglect of financial reporting information will have
effect on the banking activities.
Significance of the study
study will be relevant to the following parties:
organization: Every business organization uses
financial statement to communicate information about its performance, resources
and obligation and interested parties. The report, are prepared in such away to
meet different needs of the parties.
Managers: It is expected that at the end of the research work
solutions would be provided to the problems and recommendations on the content
and presentation of financial statement and the influence of standards on
financial statement in the Nigeria banking sector.
It will give more enlightenment to shareholders on the impact of accounting
standards on their financial reporting and presentation.
will serve as a reference point for the future researchers’ interest.
Scope of the study
study attempts to access and evaluate the impact of accounting standards on
financial statements in the Nigeria banking sector. The study covers the Statement
of Accounting Standard (SAS), the Nigeria Accounting Standard Board (NASB) now
referred to as Financial Reporting Council of Nigeria (FRCN), the relevant International
Accounting Standard Board (IASB) and the International Financial Reporting
Standard (IFRS). The study is concentrated in Benin City, Edo State. The study
is strictly within the time frame of 5 years (2011 to 2015). However, a sample
size of 14 banks was used for effective result.
Limitations of the study
The following are the limitations encountered during
the course of this project.
of adequate and sufficient finance in terms of the cost of collecting data, and
processing the required information hindered the smooth conduct of this
Inability to obtain necessary
information due to administrative bottleneck, couples with the fact that some
information were considered as confidential those do not encourage sound
a principle that guides and standardizes accounting practices.
Statement: Is a formal record of the financial activities and position of a
business, person or other entity.
Position: It is another name for balance sheet and it reports an entity’s
assets, liabilities and the difference in their total.
Reporting: This is the process of producing statements that disclose an
organization’s financial status to management, investors and the government.
The condition of related objects.
The quality of being reliable, dependable or trustworthy.
The act of conducting or caring out business negotiations, plans.
judicious use of means to accomplish an end.