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
OF CONTENT vi
OF TABLES vii
CHAPTER ONE: INTRODUCTION
BACKGROUND OF STUDY 1
STATEMENT OF THE PROBLEM 3
OBJECTIVE OF THE STUDY 4
RESEARCH QUESTIONS 4
STATEMENT OF RESEARCH
SIGNIFICANCE OF THE STUDY 6
SCOPE AND LIMITATIONS OF THE
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
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
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
6.1 CONCLUSION 61
6.2 RECOMMENDATIONS 62
6.3 SUGGESTIONS FOR FURTHER STUDIES 63
APPENDIX I 66
APPENDIX II 70
TABLE I: The accuracy and the fundamentals that guide the
preparation of the Company’s financial
Table II: The financial reports meet the needs of its various
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
The impact of financial reporting on the corporate
performance of a business organization is becoming more apparent to user groups
of a financial statement.
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).
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
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
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.
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.
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
3. What influence has the financial report on the business
4. What are the possible suggestion and recommendations based
on the findings of the study?
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
3. Ho: corporate organizations comply strictly to the
Hi: Corporate organizations do not comply strictly to the statutory
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
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
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.
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
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.
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
RESEARCHER: an enquiring basically concerned with search knowledge.