THE IMPACT OF FINANCIAL ACCOUNTING ON THE COPORATE PERFORMANCE OF BUSINESS ORGANIZATION

THE IMPACT OF FINANCIAL ACCOUNTING ON THE COPORATE PERFORMANCE OF BUSINESS ORGANIZATION

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 service its purpose it ought to be characterized by the following.

a. Relevance

b. Understandability

c. Reliability

d. Completeness

e. Objectivity

f. Timeliness

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 doing the period must be recorded prompt 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.

1.2     STATEMENT OF THE PROBLEM

The study “The impact of Financial Reporting on the corporate performance of business organization” aims at investigating the financial reports of selected companies in Abuja a view to determine the following;

a.    The extent to which a standard financial report contributes to or detracts from the growth of a business organization.

b.    The extent to which the financial reports of corporate business organization comply with statutory provisions.

c.     The uniformity and conflict which exist in the financial reporting regulations given the multiplicity of regulators.

Therefore, based on the above statements, the researcher shall investigate the financial accounting reporting standards and every regulation their bear on the financial statement and to the extent the selected company (s) has either complied with or disobeyed the relevant statutes.

1.3     OBJECTIVES OF THE STUDY

The broad objectives of the study is to examine the impact of financial accounting on the corporate performance of business organization, other specific objective are as follows

                   i.            To assess the impact of financial accounting  or corporate performance of business organization

                 ii.            To examine the adequacy of financial statement in decision making

              iii.            To examine how disclosure requirement of the state affect corporate performance

              iv.            To assess company’s compliance with the regulation

                 v.            To evaluate whether financial report meets the needs of the various users 

1.4     RESEARCH QUESTIONS

In order to determine the impact of financial reporting on the corporate performance of business organizations, it is pertinent to test the following question;

1.     Does financial accounting have any significant impact on the corporate performance of business organization

2.     Does the information disclosed in the financial statements adequate to support good decision making?

3.     Does the disclosure requirement of the statutes affect corporate performance positively or negatively?

4.     Do companies comply strictly with the regulation?

5.     Does the financial report meet the needs of the various users?

1.5     RESEARCH HYPOTHESES

The following hypothesis shall be tested in this research works to ascertain the impact of financial accounting on the cooperate performance of business organization:

H₀: Financial accounting has no significant impact on the corporate performance of business organization

H₁: Financial accounting has significant impact on the corporate performance of business organization

1.6     SIGNIFICANCE OF THE STUDY

This study is a very important one and most significant at this period of economic situation which has witnessed the collapse of giant corporate with impressive profit and loss accounts and balance sheet statement, because the financial report serves is a “prima facie” evidence on the state of attains of such companies as well as its performance and could be relied upon as a certificate because it had the auditors certification, financial reporting could be done with every ser business, utmost good faith and diligence.

1.7     SCOPE 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 braving industry. The study used the Nigerian Breweries plc, Abuja.

1.8     LIMITATIONS OF THE STUDY

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

a.     The confidential nature of financial accounting information in the business organization posed as a problem to this business organization posed as a problem to this study.

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

c.      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.

1.9     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.

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