THE EFFECT OF FINANCIAL ACCOUNTING REPORTING ON THE CORPORATE PERFORMANCE OF BUSINESS ORGANIZATION
This research work ‘’The Effect of Financial Accounting reporting on the corporate performance of business organization; basically aims at ascertaining how financial accounting report has helped in advancing the objectives of corporate organization. In the process, it investigated the effects that financial accounting bear on the performance of a business. Furthermore, the sought to ascertain the compliance of relevant status by corporate organizations and the overall satisfaction of stakeholders in a corporate organizations. The study obtained its data basically from primary source. The primary sources of data collection employed were questionnaires oral interview and observation. The study revealed that a lot of problems were inherent in financial reporting ranging from non disclosure of vital information, subjective judgment of the financial information and most time non-compliance to relevant status. The recommendation given such as strict compliance to the relevant status were made to the organization, the government needs to strengthen its regulatory agencies in order to ensure that the financial statements show a “true and fair view” and comply with the relevant status at all times.
1.1 BACKGROUND OF THE STUDY
The impact of financial accounting 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 report therefore is a documental statement which forms the various interest groups to a business on the operations and performance of their business in a period under reviewing 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.
Relevance Understandability Reliability Completeness Objectivity Timeliness
If 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 during the period must be recorded properly, 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 Accounting Reporting on the Corporate Performance of Business Organization” aims at investigating the financial issues in accounting as a result of the global economic and financial crisis, there has been a continued attempt to grapple with accounting and economic issues.
In many cases, these issues remain unsolved from generation to generation. The fundamental nature of accounting is still actively being debated with no sign of resolution. The conceptual theory is, for example currently being revisited by the ISAB. A particular problem is whether the stewardship or the decision making objective should be paramount.
1.3 OBJECTIVES OF THE STUDY
The broad objective of the study is to examine the impact of financial accounting reporting on the corporate performance of business organization, other specific objective are as follows:
To assess the impact of financial accounting reporting on corporate performance of business organization To examine the adequacy of financial statement in decision making To examine how disclosure requirement affect corporate performance To assess company’s compliance with the regulation To evaluate whether financial report meets the needs of the various users
1.4 RESEARCH QUESTIONS
In order to determine the impact of financial accounting reporting on the corporate performance of business organizations, it is pertinent to test the following questions;
Does financial accounting have any significant impact on the corporate performance of business organization? 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 report meet the needs of the various users?
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 report serves is a “prima facie” evidence on the state of affairs 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.
1.6 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 task especially the financial resources with which to execute it, it is limited to commercial banks. The study used the Nigerian Commercial banks in Kaduna.
1.7 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: Is a business as at a specified date.
GOVERNMENT: Is 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.
REVIEW OF RELATED LITERATURE
2.1 OVERVIEW OF THE FINANCIAL ACCOUNTING SYSTEM
The financial accounting system is one that is well designed to facilitate the smooth, efficient and uninterrupted flow of data from the point where a transaction occurs through the various stages of data processing to the final stage, thereby reached in a report. (Admon, 2011).