FINANCIAL REPORTING IN NIGERIA, PROBLEM AND SOLUTION
ABSTRACT
The unprecedented master influx of
financial reporting in the country party as a result of deregulation policies
occasioned by sometimes government intervention has aroused the curiosity of
writers to carry out study of this nature. This reporting apparently act as a
fool for management decision. The problem does not lie on management decision
per se but the financial market in general and public users as a whole.
Thus the cord of this study is to find
among other things need, avenue to get financial report, the likely, problem
and their root cause eventual findings and analyses of research work,
recommendations and possible solutions as regard to proper financial reporting
in Nigeria
The study follows the chronological
order of first introducing the study, coupled with its evolution, objective,
significance and likely problems to resolve elaborating on the scope of study
and definitions of some teams used in the study.
In the literature review of the study,
the researchers try to extract the salient quality of the study.
In carrying out the research, the
researcher made used of personal interview, observation and collection of
related literature in obtaining their information.
Furthermore, analyses their finding,
citing problems, their root cause, and the users of the financial reporting the
regulatory bodies.
Finally, in recognition of the obvious
of the fact, the reveals as regard to the analyzed work recommendations were
made and possible solutions suggested.
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.
STEMENT
OF PROBLEMThe 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.
SCOPE
AND LIMITATION OF THE SUDYThe scope of my study covered library and some
institution with record on financial report across the country. Limitation
encountered in respect of carrying out the study is numerous with
multiplications. When limitation includes: Transport, Time constrain
communication gap, short of material and most especially, restricted assess to
available material for the study.
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.
REFERENCES
Roger,
H Her Manson at all, financial accounting Business publication inc, U.S.A 1984
2nd Ed.
Kermit
D. Larson, et al, fundamental accounting principles, Homewood U.S.A 2nd ED.