The focus on this study is to provide empirical frame work for the appreciation of the relevance of accounting standard in cooperate financial reporting in the Nigeria private sector viz – a –viz the ever – increasing demand of the user of financial statements. It reflects on the scope of coverage provided by statement of account standards (S.A.S) issued, by the Nigerian Accounting Standard Board (NASB) for business activities in the Nigeria economy. Also, it is to be reference work for further research topic. The study is design to proffer solution to the problem of limited information in the financial statement, non – compliance of reporting enterprises with SAS and the slow, untimely response of SAS issued from time to time. The study draws the view of people through questionnaire administration regarding the relevance of accounting standard in corporate financial report.
TABLE OF CONTENT
Title page i
Table of content vi – vii
- Background of the study 1
- Statement of the problem 2
- Research question 2 – 3
- Hypotheses of the study 3
- The objective of the study 3
- The scope of the study 4
- Limitation of the study 4
- The significance of the study 4
- Definition of terms 5
2.0 Introduction 6
2.1 Historical backgrounds 6 – 7
2.2 Current literature reviews 8
2.2.1 Financial reporting 8 – 9
2.2.2 Accounting standard 9
2.2.3 The Nigeria accounting standard board (NASB) 9 – 10
2.2.4 Statement of accounting standard (SAS) 10 -11
2.2.5 Legal status of accounting standard 11 – 12
2.2.6 Shortcoming of financial reporting in Nigeria 12
2.2.7 Criticisms/lapses of accounting standard (SAS) 12
3.0 Research methodology 13
3.1 Research design 13
3.2 Area of the study 13
3.3 Population of the study 13 -14
3.4 Sample and sampling procedure 14
3.5 Instrument of data collection 14 – 15
3.6 Method of data collection 15
3.7 Method of data analysis. 15 – 17
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION
4.0 Introduction 18
4.1 presentation and analysis of data 18
4.1.1 Respondent characteristics 18 – 20
4.1.2 Open ended and two way question 20 – 22
4.1.3 Analysis / test of hypothesis 22 – 23
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Introduction 25
5.2 Summary 25
5.3 Conclusion 26
5.4 recommendations 26 – 27
Appendix I 29
Appendix II 30
1.1 Background of the Study
In recent time, the field of accounting at large has witnessed a contrast between two things: accounting theory and accounting practice.
Accounting theory may be describe a logical reasoning in the form of a set of board principle that provide a general frame of references by which accounting practice can be evaluated and that guide the development of new practice and procedures. It has its most important goal, the provision of a coherent set of logical principle that forms the general frame of reference or the evaluation and the development of sound accounting practices.
Furthermore, its primary test lies in its ability to explain or predict a pass current event, and verification of the prediction or explanation serve as, at least, a partial test of ability of the theory to predict future vent and condition. All theories are subjected to modification or abandonment with the development of new theories that permit better predictions. The general notion that “what goes up must come down drastically modified when objects were shot into space never to return, although the refined theories of gravitational pull had long before predicted such an event,.
Accounting practice, on the other hand, encompasses all activities undertaken by professional accountants with a network of conventions and guidelines and procedures for the purpose of preparing, presenting and providing financial information that depict a fair and reasonable disclosure of the financial affairs of the respective organization, enterprises and firm to which belong. This aspect of accounting has continued to evolve on response to changing accounting techniques and concepts.
New accounting practices have been necessary ton keep pace with changing economic institutions and relationship and the changing objectives of accounting practice and procedure about with respect to the provision, presentation and reporting of financial information relating to several reporting enterprises. However, Accounting theory is closely related to accounting practice, whether it is an evaluation practice and it effects, or an explanation of practice, or the development of a framework for the audience of change in accounting practice and adoption to new environments. It becomes very clear there, from the above, that accounting theory serves as a guide and relator for accounting practice.
This interdependence between theory and practice is what informed the present part of accounting theory, corporate financial reporting is a by. Product of practice. In view of the fact that most businesses today are operated in the form limited liability companies which are owned by shareholders and managed by director appointed by such shareholders, coupled with the consideration that the last decades are continued to witness a resolute drive towards privatization, this research work will focus mainly on the privates sector of the Nigerian economy.
1.2 Statement of the Problem
A research problem of the type of being investigated in this study is normally recognized when a doubt is raised, difficulty is created or dissatisfaction occurs and a solution imperative. With respect to the study, the statement of the problem of investigation is here under outlined paragraph by paragraph.
Limited scope of coverage and the inadequacy of statements of accounting standard (S.A.S) in the viz – a viz the varying kinds, nature, types and diversity of business operation existing within the Nigerian private sector where such standards are viewed from perspective of the mixed economic system as well as the speed of the industries in the economy.
Failure to disclose relevant information in the financial statement or report for reason of misconnect on the part of the providers and initiators of financial information, faithfully representing the underlying commercial activity of an enterprises and necessary departure from accounting standards in order to present a true and fair view.
1.3 Research Question
In the view of the problem enumerated in the statement of the problem section, the following question the following question will be considered
- how adequate is the scope of coverage offered by statement of accounting standard in view of the diversity of business operation in the Nigeria private sector?
- To what extent are department form S.A.S necessary for corporate financial report to give a true and fair view?
- Can application of accounting standards ensure that the accounting information provided In the corporate report faithfully present the underlying commercial activity of the activity of the reporting enterprises?
- Does compliance with statement of accounting standard (S.A.S) help to ensure that the financial statement give a true and fair view?
- Does the (N.A.S.B) have any legal musce to enforce compliance with statement of accounting standards (S.A.S)
1.4 Hypothesis of the Study
The following hypotheses have been formulated for the testing o n this research work in order to draw a logical conclusion from the results.
- Null hypothesis (ho): in the view of the diversity of business operation in the Nigerian private sector the scope of coverage offered by statement of accounting standards (S.A.S) in adequate
Alternate hypotheses (hi): in the view of the diversity of business operation in the Nigerian private sector, the scope of covariate offered by S.A.S is adequate
- Ho: Departures form S.A.S is not necessary for the corporation financial report to give a true and fair view
iii. Hi: Departures form S.A.S is necessary for the corporate financial report to give a true and fair view.
1.5 Objectives of the Study
The specific aims of this study are also as follows!
- finding solution to the problem outlined in the statement of problem outlined the statement of problem
- to educate and inform the user of financial reports so that they would be in a better position to appreciate the effect of accounting standard on the preparation of cooperate financial reports.
- To determine the adequacy of the scope of coverage offered by accounting standard (S.A.S) in the view of the diversity for business operation Land the ever – increasing demand of users of financial information.
1.6 Scope of the Study
The nature of this study entails ascertainment of the effects and impact accounting standard on the quantity relevance and reliability of corporate financial reports produced for user by various reporting enterprises in Nigeria.
1.7 Limitation of the Study
This research work will be limited in scope to the private sector in general and not to the public sector, no particular organization will be studied rather, the study will spam a time range of between 1990 and 2003 while covering specifically the geographical are of lagos.
1.8 The Significance of the Study
This study intent and purpose will be of immense significance at various user of corporate financial reports or financial statements, prepare and provider of financial of financial statement, prepare and provider of financial information of firms practicing professional accountants, the standard setting body, auditing firm engaged in the auditing of reporting enterprises, student and lecturer accounting in tertiary institutions, accounting bodies and institutes of chattered accountant of Nigeria (ICAN).
On the part of user of accounting information, the study will:
- Enable them to know the extent of reliance that can place on the information supplied in the financial report of the reporting enterprises in which they have as stake.
- Enlighten them about the degree of usefulness of the corporate reports a means of carrying out effective intra, inter, and industry comparison with the respect to other group of beneficiaries of this study, the following are worthy of note.
- The providers and preparer of financial information contained in the corporate report will be known the extent of disclosure demanded of them.
- The standard setting bloody will become better information about the lapses of issued standards and thereby be able to improve on or reviews the standard more effectively.