CHAPTER ONE
1:1 INTRODUCTION
Financial reporting is principally concerned with the communication of financial Information relating directly or indirectly or indirectly to an enterprises resource, Obligations, earnings e.t.c. The principal reporting medium is normally financial statement financial statements are important measure of communicating for useful purpose. The usage of scare economic resources by an enterprise. As such, they need to contain all relevant information to be realized, and be reality understood by the well-informed reader.
When different accounting treatment and disclosures are used for essentially the same transaction or when information is omitted, the chances of the information provided in the financial statements being misleading or maunders are insured. Although there may sometimes be good reasons for differences in accounting standards, principles, applications or disclosures that evolved at national level or otherwise over turn now with the introduction of MIDF and the level of public interest developing in financial reporting may be a good tome to look at our local reporting form an over all perspective.
These issues of validity and credibility from the care of my of my topic “financial Reporting in Nigeria: problems and solution.” The objectives of my speech is to identify and define the problems in financial reporting in Nigeria at present and thereafter to offer or suggest solutions or recommendations. Thereon. In this regard, a brief over view of the evolution of financial reporting. Its objectives and the over all challenges facing if will be conducted.
OBJECTIVE OF THE STUDY
The need for information on which to base investment credit and similar decision underlies the objective of financial reporting. If information provided is not useful for decision making, there would be no benefits form providing it to set against related costs. The objectives issued by the U.S financial Accounting standard board (FASB) on financial reporting are as follows:
1.Financial reporting should provide information that is useful to present and potential investors and creditors and other users in making national investment, credit and similar decisions.
2.The information should be Comprehensive to those who have a reasonable understanding of business and economic events.
3.Financial reporting should proved information to help present and potential investors and creditors and the other users in assessing the account, firming and ascertaining of prospective cash receipts from cash out flows of a business ability to generate sufficient cash to meet existing obligations as and when due, reinvest in the business for further growth and pay dividends to shareholders.
4.To assist existing and potential investors in assessing.
5.To provide information about economic resource of an enterprise claims to those resources and the effect of transactions or economic events.
6.To provide information about how enterprises obtain an utilizes cash resources about its borrowing and repayment of borrowing.
7.Financial reporting should provide information about how management has to use the resources of the enterprise entrusted to it by owners of the business.
8.Finally, financial reporting should provide information that is useful to management in making decision in the interest of the business.
This seems fairly comprehensive definition to the objective of financial reporting. It of course leads us to the question of whether Nigeria financial reporting meets such objectives.
1:3 SIGNIFICANT OF THE STUDY
The whole essence of financial report as noted is to serve as a tool in decision making, partially decision affecting shift in resources to better opportunities. Three principal users of the financial reporting are shareholder the send. (Normally the Bank) and the potential investor. There is no doubt that the extent of financial literacy of these people/parties invariably shapes the quality of financial reporting.
1.4 STEMENT OF PROBLEM
The problem of financial reporting in Nigeria can be defined according to the extend to which the objective of financial reporting are met.
1.Mixed timeless and value: On timeliness, our local performance in mixed. Most Companies do issue their account within six months of the year-end and while most banks written four months. As it regards to value most companies do discover or disclose what is required by law and accounting standard. For from perfect, while in some areas a little out of data fairly comprehensive.
2.Reliability in terms of reliability noted in the objective the measure rest on the quality of verification and neutrality. How would financial reporting in Nigeria for on the reliability score-eard/ an evolution of recent trends in financial reporting system would provide some incomparability sights on this issue, where sadly it think we score very.
3.Comparability and consistency: We identified that benefits are firm companies information across companies and between years.
In order words, companies stand to go gain from financial analysis.
However, it is common knowledge to those of us that conduct (or attempt to conduct) financial analysis that key limitation exist in such exercises.
1.6 DEFINITION OF TERMS
BALANCE SHEET: This is a statement showing a summary of the assets and liability of a business.
DOUBLE ENTRY BOOK KEEPING: This is a general accepted method of accounting which demands every transaction must be recorded device in the book of account to go complete information about the given and receiver of values in that single transaction.
ACCOUNTING STARNDARE: This is the codification of accounting application to remove subjectivity from accounting practices.
FINANCIAL ACCOUNTING STANDARD BOARD (FASB): Issue statement of financial accounting standard which be considered as authoritative expresses of generally accepted accounting principle.
