Abstract
The project examines the impact of
audited financial statements on an organizational performance and profitability
using Nigeria bottling company as a case study. The main objective of this
study is to examine whether the implementation of financial statement has
helped in the growth and development of the organization. The primary source of
data collection was used in gathering data from respondents. A structure
questionnaire was designed by the researcher and validity by two experts from
the statistics department was used to obtain data Chi-Square (X2)
was used to test hypotheses formulated. It was discovered that audit report is
very important to the organization, especially Nigeria bottling company plc,
which was the areas of the main focus, it enhance the growth of the
organization and has indeed brought in positive impact. It was concluded that
it is the primary duty or responsibility of management and the board of
directors of the company to prepare the financial statement and it is the duty
of the auditor to examine the financial statement prepared by the management.
It was recommended among others that audited financial statement should be
prepared in a manner that will show the responsibilities of both the auditor
and management.
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 Problem 2
1.3 Objectives of the Study 3
1.4 Research Questions 3
1.5 Statement of Hypothesis(es) 3
1.6 Significance of the Study 4
1.7 Scope of the Study 5
1.8 Limitations of the Study 5
1.9 Definition of terms 6
Chapter Two: Review of Related Literature 8
2.1 Introduction 8
2.2 Definition
of Audited Financial Statement 8
2.3 Audit
Independence 9
2.4 Types
of Audit Independence 11
2.5 Power
and Duties of an Auditor 15
2.6 Purpose
of Audited Financial Statement 16
2.7 Credibility
and Problems of Audited Financial Statement 18
2.8 Concept
of Financial statement 21
2.9 Audited
Financial Statement and Investment Decision 22
2.10 Financial
Performance 23
2.11 Elements of Financial Statement 24
2.12 Financial Ratio in Relation to Performance
and Profitability 26
2.13 Applying Financial Ratios on the Financial
Statement of ABJ Industries to ascertain the Profitability and Performance of
the Entity 32
Chapter Three: Research Method and Design 36
3.1 Introduction 36
3.2 Research Design 36
3.3 Description of Population of the Study 36
3.4 Sample Size 37
3.5 Sampling Techniques 37
3.6 Sources of Data Collection 37
3.7 Methods of Data Presentation 38
Chapter Four: Data Presentation, Analysis and Interpretation
4.1
Introduction 39
4.2 Presentation of Data 39
4.3 Data Analysis 39
4.4 Hypothesis Testing 48
Chapter Five: Summary of Findings, Conclusion and Recommendation
5.1 Introduction 54
5.2 Summary of Findings 54
5.3 Conclusion 55
5.4 Recommendations 55
References 57
Appendices
59
CHAPTER
ONE
INTRODUCTION
1.1
Background to the Study
The
demand for auditing arises from the potential conflict of interest that exists
between owners (stakeholders) and managers. The contractual arrangement between
those parties normally requires that management issues a set of financial
statements that purports to show the financial position and results of
operation of the entity. In order to properly evaluate the financial
statements, the parties to the contract must agree on a benchmark or criterion
to measure performance without an agreed-upon criterion, it is impossible to
measure the fair presentation of the financial statements.
Generally
Accepted Accounting Principles (GAAP) have, over times become the primary
criteria used to prepare financial statements. As the term implies, these
principles are generally accepted by the diverse users of financial statements.
Nigeria
took a step to redefine the scope and maintenance of state enterprise in 1953
as a result of the controversy surrounding public sector ownership and the
virtues of private cooperation in Nigeria.
Nigeria bottling company limited is one of the few multinational organizations
that had it’s beginning in Nigeria from a small family owned operations at
inception.
The
Nigeria bottling company limited (NBC) was in cooperated in November 1951 as a
subsidiary of the A.G levities group with the franchise to bottle and sell
coca-cola product in Nigeria. Production began in 1953 at bottling facilities
in Ebuta-Melta, Lagos.
The role played by audit in an organization performance and
profitability in developing countries is progressively becoming important as it
gives room to know what is owned and what is spend by the entity. It is
important for the private sector organization in the country to appoint an
independent auditor who will present a report stating whether the financial
statement and the book of account shows a true and fair view off the financial
position of the organization.
1.2
Statement of Problem
Over the years there has been a controversy over the impact
which audited financial statement has on organization performance and
profiability. In view of this, the research wishes to investigate what impact
audited financial statement actually have in an organization performance and
profitability. The study is also set out to remove the uncertainty and make
clear the important of audited financial statement to an organization .
1.3
Research Questions
The following research question were raised for the study
1. Has
there been any impact of audited financial statement on organization
performance?
2. Does
audited financial statement help achieve organizational goals and objectives?
3. Does
audited financial statement increase profitability of the organization?
1.4 Objectives
of the Study
The aim of the study is to examine
1. What
impact audited financial statement has on an organization performance?
2. To
know if the audited financial statement has help to achieve the goal/objective
of the organization.
3. To
ascertain if audited financial statement increase profitability of the
organization.
1.5 Statement
of Hypotheses
For the purpose of this study the
researcher would be stating the hypothesis thus:
Hypothesis One
HO: Audited financial statement has no impact on
an organization performance.
HI: Audited financial statement has impact on an
organization performance.
Hypothesis Two
HO: Audited financial statement does not help to
achieve organization goal and objectives.
HI: Audited financial statement help to achieve
organization goal and objectives.
Hypothesis Three
HO: Audited
financial statement does not increase profitability of the organization.
HI: Audited
financial statement increase profitability of the organization.
1.6 Significance
of the Study
Public Sector Organizations: It is
expected that the finding of this research work would be useful to the public sector
organizations by enabling them to know that keeping of proper accounting records
will be of help to improve the growth and development of the organization. This
study will also enable the private sector to know the effect of audited
financial statement on organization performance and profitability.
1.7 Scope
of the Study
The scope covers the private sector
organization with special to Nigeria Bottling company plc. Data was gathered
from the organization’s library and other document.
The studies focus on the reporting
standard that governs the firm and content of audited financial statement as
regard the organization within the range of five years, (2011 to 2015). The
study is restricted to the account and audit department of the organization.
The study focuses more on Benin City Branch and used a sample size of 40 for
effective result.
1.8 Limitations
of the Study
This study suffered so many
hindrances which include:
1. Lack of Proper Accounting Record: Most public sector organization does
not keep proper accounting records therefore it makes it difficult for data
gathering.
2. Financial Constrain: Worth mentioning also is the
financial constraint which hindered the number of visits undertaken.
3. Time Constraint: It was usually very difficult taking
out time to go to the organization to source for information.
4. Unfriendly
staff: Some of the staff of Nigeria Bottling Company, Benin City was
unfriendly. Their actions and reactions to me was quite a problem, all the
same, vital information was obtained.
1.9 Definitions
of Terms
Auditor: This is a qualified accountant who
examines books of account and financial statement and report to the users of financial
statement and those who rely on it.
Qualified
Accountant: This is a
person who meets the statutory requirement of a state as responds education
moral, integrity, character, special training and experience.
Audit
Evidence: This refers to
the fact or proof required by an auditor to enable him reaches a reasonable conclusion
regarding the financial statement of an organization.
Opinion: It refers to belief or judgement
based on experience.
Integrity: It refers to the quality of being
honest and upright in character.
Errors: These are unintentional actions or
mistakes which enter into the account when transactions are made.
Fraud: It is deception that is deliberating
practices in order to secure unfair or unlawful gain.
Negligence:
It refers to as
carelessness, failure to take proper care or precaution.
Confidence:
The ability to brut and
to keep information secret.
Financial
Statement: This consist
of balance sheet, profit and loss account, cash flow statement, value added
statement and five year historical, financial summary which collectively are
intended to give a time and fair view of state of affair of the organization.
Accounting
Information: Is the
knowledge recovered from recording, summarizing and analysis the financial
transaction of the organization which assists users in making decision.
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