Abstract
This research examines
the effect
of financial reporting standards on the quality of financial reporting in
Nigeria, aims to bring out all
the various guidelines postulates, assumption, principles and methods adopted
by a reporting entity in the preparation of its account so as to avoid further
conflict between the prepares and users of financial statement. It also aims at
bringing to the awareness of the users of financial statement the benefits of
financial reporting standard towards improving business performance. The researcher adopted the primary source of
data collection. it was found that the various conventions generalization,
method were postulate practices, procedures, principle and standards are not
synonymous and as such should not be treated interchangeably or taken to mean
the same thing by users of financial statements. Finally, it was recommended
that the standards setting body maintain cooperation with government regulatory
bodies and financial institution so as to ensure compliance and disclosure in
all material respect with financial reporting standard requirement. The
financial reporting standard (FRS) should ensure full compliance.
TABLE OF CONTENTS
Title
Page i
Certification
ii
Dedication
iii
Acknowledgements
iv
Abstract
v
Table
of Contents vi
Chapter One:
Introduction 1
1.1
Background to the Study 1
1.2
Statement of Problems 3
1.3
Research Questions 4
1.4
Objectives of the Study 4
1.5
Statement of Hypotheses 5
1.6
Significance of the Study 6
1.7
Scope of the Study 7
1.8
Limitation of the Study 7
1.9
Definition of Terms 8
Chapter
Two: Review of Related
Literature 11
2.1
Introduction 11
2.2
Historical Development of Financial
Statement 12
2.3
International
Financial Reporting Standards (IFRS) 17
2.4
Objectives of Financial Statement and
Reporting 26
2.5
Disclosure in Corporate Financial
Reporting 28
2.6
Nigeria and IFRS Adoption 30
2.7
IFRS and the First Time Adopters 33
2.8
Financial Reporting Quality 41
2.9
Managing the Transition Process 47
Chapter
Three: Research Method and Design 51
3.1
Introduction 51
3.2
Research Design 51
3.3
Description of Population of the Study 52
3.4
Sample Size 52
3.5
Sampling Techniques 52
3.6
Sources of Data Collection 52
3.7
Method of Data Presentation 53
3.8
Method of Data Analysis 53
Chapter
Four: Data Presentation, Analysis and
Hypothesis
Testing 55
4.1 Introduction 55
4.2 Data Presentation 55
4.3 Data Analysis 55
4.3 Hypothesis Testing 61
Chapter Five: Summary
of Findings, Conclusion
and Recommendations 67
5.1 Introduction 67
5.2 Summary of Findings 67
5.3 Conclusion 69
5.4 Recommendations 70
References 74
Appendices 77
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
The end product of financial reporting
is the preparation and publication of financial statement. A substantial number
of alternative postulate, principle assumption and method adopted by a
reporting entity in the preparation of financial statement can significantly
affect its result of operation and understanding the interpretation of
financial reporting in financial statement.
The financial statement prepared by the
accountants is based on convention that is derived from printable reports and
there conventions originate from such concepts as: entity, going concern,
periodicity, realization consistency, matching concept, historical cost. These
concepts are fundamental to financial reporting standards and presentation of
financial statement, disclosure of fundamental financial concept and acts
followed.
This is because financial statement are
for interest to a variety of users, especially shareholders, the use of
financial statement clearly valuable evaluation of a reporting enterprise
unless if financial statement clearly disclose the significant financial
accounting policies that have been adopted in their preparation.
Its is also adopted in recognizing
measures and values on item of revenue, expense, gain, loss or any asst or
liability. Financial reporting practice have evolved in response to the verity
and complexity of types of enterprise and business transaction, there exist
more than one recognized calculating profit, measuring depreciation, valuing
inventory.
The financial reporting standards are
developed to ensure a high degree of standardization in the published financial
statement. They provide the necessary information about how financial reporting
information should be gathered, prepared and presented in order to improve the
value of its contents and facilitate through understanding.
1.2 Statement of Problem
Financial reporting standards as an
aspect of the accounting profession is concerned primarily with the Tran
writing of financial information to the user who would use it to improve the
outcome of their decision process.
The financial information are embodied
in the financial statement which serves as a means of communicating information
to interested parties the obligation and performance of the reporting entity or
enterprise in Nigeria system.
In preparing and presenting financial
statements, the accountants must be guided in such preparation by the standard
of the profession to ensure that such financial statement prepared and
presented will facilitate a thorough understanding to its user.
So, in view of the above, the purpose of
this research is to evaluate the effects of financial reporting standards ob
the quality of financial reporting in Nigeria. However, there are number of
problems associated with the application of financial reporting standard along
side with the benefits.
1.3 Research Questions
The following research questions are
used in the research work.
1.
What is the effect of financial
reporting standard on the quality of financial reporting in Nigeria?
2.
What are the problems encountered in the
application of financial reporting standard?
3.
Are financial reporting standard
appropriate in some circumstances in preparing financial statement?
4.
Are financial reporting standard to
defaulted and too many?
5.
Is financial reporting disclosing
required information reporting in excess?
1.4 Objectives of the Study
1. To
bring out all the various guidelines postulates, assumption, principles and
methods adopted by a reporting entity in the preparation of its account so as
to avoid further conflict between the prepares and users of financial
statement.
1.
To review the various financial
reporting standards and their disclosure requirement, so as to aid their
upstanding and interpretation thereof.
2.
To identify the objective of financial
reporting standard to business enterprise and to users.
3.
To identify the problem posed by the
application standard as well as identify their solution.
4.
To bring to the awareness of the users
of financial statement the benefits of financial reporting standard towards
improving business performance.
1.5 Statement of Hypotheses
Taking cognizance of the above in this
research work, two (2) hypotheses statement were formulated viz:
Hypothesis I
Ho: Financial reporting
standard has no significant effect on the quality of financial reporting in
Nigeria.
Hi: Financial reporting
standard has significant effect on the quality of financial reporting in
Nigeria.
Hypothesis
II
Ho: There are no problems
encountered in the application of financial reporting standard.
Hi: There are problems
encountered in the application of financial reporting standard.
1.6 Significance of the Study
At the end of this research work, one
will be able to know the procedures adopted in the preparation of financial
statement reporting and the information contained therein.
Consequently, the relevance of the
various concepts and convention in the preparation of financial will be
classified. This is based on the fact that an attempt will be made to discover
the importance of disclosure of the various concept and convention used in the
preparation of financial statement, the understanding and interpretation of
which it will greatly affect the decision of users.
Also, the study will broaden the
knowledge of the academic community on the importance of financial reporting
standard on the quality of financial statement and their subsequent
disclosures.
1.7 Scope of the Study
The scope of this research work is
limited to the effect of financial reporting standard on the quality reporting
in Nigeria, a case study of Zenith Bank Plc.
In this study, the research covers in
depth information gathered in such areas as, the historical development of
financial statement, the objective of financial reporting, the various
financial reporting standard, postulate the theoretical concept and principles.
The nature of financial reporting standards and their overhead and effect, the
entities that are concerned with financial reporting standard is presented as
well as the users of financial statement.
1.8 Limitations of the Study
In carrying out this research work, a number
of difficulties were encountered.
1. The
sourcing of data and information for the research study posed a lot of
constraints on the research. For instance, officials of Zenith Bank Plc
referred the researcher to the Bank’s website, which consulted contained
information not detailed enough for the study. Their refusal to give out
relevant information was based on reason of secrecy and lack of authority.
2. The
non-availability of existing research materials made the researcher to search
deeply for relevant data information from the internet, library and book
stories.
3. In
the course of personal interview conducted by me, it was difficult to obtain
some information, as they were deemed confidential by the companies and persons
visited.
1.9 Operational Definition of Terms
For the purpose of clarity, some of the
terms in the research work as derived by IAS are explained below.
Financial Statement: This
is a formal record of the financial activities of a business, person or other
entity.
Financial Policies: These
are those bases or principles describing a corporation choices regarding its
debt/equity mix, currencies of denomination, maturity structure and hedging of
decision with a goal of maximizing the value of the firm to some set of
stockholders.
Financial Information: These
are data such as credit cards numbers, credit ratings, accounting balances and
other monetary facts about a person or organization that are used in billing,
credit assessment loan transactions and other financial activities.
Financial Reporting
Standards: This is a set of accounting standards stating how
particular types of transactions and other event should be reported in the
financial statement.
Entity:
This means an economic unit that is treated as separate from parties having
proprietary or economic interest.
Investment:
These are asset acquired for the purpose of income generation without any
activities in the form of production, trade or provision of services.
Asset:
This is a research controlled by an entity as a result of past event from which
future economic benefit are expected.
Liability:
A present obligation to transfer economic benefit as a result of past
transaction.
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