Full Project - IMPACT OF FINANCIAL ACCOUNTING QUALITY ON THE CORPORATE

Full Project – IMPACT OF FINANCIAL ACCOUNTING QUALITY ON THE CORPORATE PERFORMANCE OF BUSINESS ORGANIZATION

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CHAPTER ONE

INTRODUCTION

Background of the Study

Accounting quality is the extent to which accrual accounting facilitates the measurement of the underlying economic performance. In the rest of this section, I develop this concept more formally. It has also been shown that poor quality financial accounting may have an adverse effect on corporate performance and economic choices, as several financial and accounting academics (Jaballah et al., 2014; Chan-Jane and Chae-Jung, 2015) affirmed. This suggests that managers’ inclination to engage in non-value-adding activities may be influenced by the quality of financial reporting. For financial reporting quality may promote better contracts to avoid investment, for example. efficiency. Additionally, it gives investors greater say in the investing choices they make. High-quality financial reporting should, therefore, decrease unnecessary and wasteful spending (Biddle et al., 2009).

The impact of financial accounting qualitying 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 accounting qualitying 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 accounting quality is to service its purpose it ought to be characterized by the following, Relevance, Understandability, Reliability, Completeness, Objectivity and Timeliness.

In the accounting process of an organization is to provide the information required to prepare a financial accounting quality 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 accounting quality. Financial accounting qualitying 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.

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 ;

The extent to which a standard financial accounting quality contributes to or detracts from the growth of a business organization.
The extent to which the financial accounting qualitys of corporate business organization comply with statutory provisions.
The uniformity and conflict which exist in the financial accounting qualitying 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

The objectives of this study are to critically examine the financial accounting qualitys of the selected company and to probe into the fundamental for their preparation as well as its presentation with a view to determining:

The adequacy of the basis and the fundamental that guides its preparation.
The degree to which the financial accounting quality meets the needs of its various users.
The extent to which the financial accounting quality conform to the established standard.
The influence that financial accounting quality has on business performance.
Finally, to present suggestions and recommendations based on my findings.

RESEARCH QUESTIONS

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

Does the information disclosed in the financial statements adequate to support good decision making?
Does the disclosure requirement of the statutes affect corporate performance positively or negatively?
Do companies comply strictly with the regulation?
Does the financial accounting quality 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 accounting quality have their benefits from this study as follows:

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 accounting quality 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
The Government Including Tax Authorities Department who have Interest in the Financial accounting qualitys 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:

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.

H0: The disclosure requirements of statements do not affect corporate performance positively.

Hi: The disclosure requirements of statements do not affect corporate performance positively.

H0: corporate organizations do not comply strictly to the statutory regulations.

Hi: corporate organizations do not comply strictly to the statutory regulations.

H0: Financial accounting qualitys do not meet the needs of the various users of financial information.

Hi: financial accounting qualitys do not meet the needs of the various users of financial information.

1.5 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 accounting quality 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 accounting qualitying could be done with every ser business, utmost good faith and diligence.

1.6 SCOPE OF THE STUDY

This study could have covered the impact of financial accounting quality 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, Enugu.

1.7 LIMITATIONS OF THE STUDY

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

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

1.8 DEFINITION OF TERMS

Financial Accounting quality: Accounting quality is the extent to which accrual accounting facilitates the measurement of the underlying economic performance. In the rest of this section, I develop this concept more formally.

Business organization: Business organization is an entity formed for the purpose of carrying on commercial enterprise. Such an organization is predicated on systems of law governing contract and exchange, property rights, and incorporation.

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.

Researcher: an enquiring basically concerned with search knowledge.

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Full Project – IMPACT OF FINANCIAL ACCOUNTING QUALITY ON THE CORPORATE PERFORMANCE OF BUSINESS ORGANIZATION

Full Project – IMPACT OF FINANCIAL ACCOUNTING QUALITY ON THE CORPORATE PERFORMANCE OF BUSINESS ORGANIZATION

Full Project – IMPACT OF FINANCIAL ACCOUNTING QUALITY ON THE CORPORATE PERFORMANCE OF BUSINESS ORGANIZATION

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