THE IMPACT OF FINANCIAL ACCOUNTING ON THE CORPORATE PERFORMANCE OF BUSINESS ORGANIZATION [A CASE STUDY OF NIGERIAN BREWERIES PLC]

CHAPTER ONE



      

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. 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 kept.
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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 Enugu State with 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, bused 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 
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The  objectives  of  this  study  are  to critically  examine  the  financial


reports 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  adequacy  of  the  basis  and  the  fundamental  that  guides  its


      preparation.


  b. The  degree  to  which  the  financial  report  meets  the  needs  of  its


      various users.


  c. The  extent  to  which  the  financial  report  conform  to  the  established


      standard.


  d. The influence that financial report has on business performance.


  e. Finally,  to  present  suggestions  and  recommendations  based  on  my


      findings.


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 the  information  disclosed  in  the  financial statements  adequate


    to support good decision making?


  2. Does  the  disclosure  requirement  of  the  statutes  affect  corporate


      performance positively or negatively?
                                           


  3. Do companies comply strictly with the regulation?


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


  This study  will  offer  solutions  to  ones  raised it  is  my  believe  that  the


  result  of  these  finding  will  go  a  long  why to  helping  researchers  in  this


  area of study, it will also enhance the understanding of the structure of


  published reports and accounts by the users.


   The various users groups of the published financial report have their


  benefits from this study as follows:


  1. 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.


  2. 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.


  3. 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.


  4. The  Employee  Group  Including  Existing: Potential  and  past


      employees.


  5. 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.


1.4 RESEARCH HYPOTHESES     


 The following  null  and  alternative  hypothesis  shall  be  tested  in  this


research works:


1. H0: The  information  provided  in  financial  statements  is  not         


adequate to support good decision making.


    Hi: The  information  provided  in  financial  statements  is  not         


adequate to support good decision making.    


2. H0:  The  disclosure  requirements  of  statements  do  not  affect


      corporate performance positively.