OVERVIEW AND APPLICATION OF ACCOUNTING POLICIES AND ITS EFFECT ON SHAREHOLDERS’ INVESTMENT IN PUBLIC LIABILITY COMPANIES A CASE STUDY OF BETA GLASS PLC, UGHELLI
This research project was designed to look into the problems
and prospect associated with choice implementation and disclosure of accounting
policies in public liability companies in Nigeria and its relationship with
shareholder investment and the returns on such investments. This study was prompted by the fact that
corporate disclosure is an inevitable activity such that the need to render a
true and fair view of financial statements by management of resources owners
(shareholders) who have entrusted them with limited resources. The literature review analyzed the stages of
department though corporate disclosure has undergone and the need to identify
most reliable accounting decision policies adopted by the firm. The possible disclosure techniques and what
influences such disclosure techniques.
The economic and political implication of accounting policy disclosures
was also put into consideration. The
research design used in the study involves the use of questionnaire and the policy
statement of one sample limited liability companies. A total of 20 questionnaires items was
developed and 50 questionnaires were distributed to members of management and
staff of the company. The responses were
tabulated and data were analyzed using the simple percentage method and the
chi-square statistical analysis for accuracy.
The result of the analysis showed that there are problem existing in the
disclosure of accounting policies as well as defined prospects. The analysis also showed that there is a
direct relationship between the accounting policies developed and adopted by a
firm and the return on investment of shareholder.
of the Study
The disclosure of accounting policies in the statement of
accounting standards’ (NASB) is contained in the current accounting standards
as at 2001. This policy formulation application development and disclosure has
been posing serious problem to many public enterprise over the years. Account
ting policies are specific accounting based are the method that have been
developed for applying the fundamental accounting concepts and convention to
specific financial transaction and item. The fundamental accounting there are
often more than one recognized accounting basis for dealing with the particular
items for example department straight line method reducing balance and sum of
the year digit method, inventory valuation includes FIFO, LIFO or weight
average method other area of major accounting principles are on consolidation
depreciation, tax and inventories.
There is variation in the implementation of these policies,
however any methods or basis adopted and the activity of the policy maker. That
is the procedure of policy formulation and attachment and the technical of
implementation is a relative to individuals company, but the extend of such
disparity is not much for instance, the difference in depreciation against
The policy making process involves a network of relationship
among policy makers decision makers individuals firm, and auditor etc.
The network process of accounting policy formulation makes
financial reports to become more and more complex that there has been more
criticism of the users of the information.
Information supplied should be that which would satisfy the
need of this user and such information should also be subjected to an
independent chew by an auditor and this will enhance reliance in financial
information is prepared as objectively as possible ability to understand
information is also very essential financial information should therefore show
a true and fair view.
Consequently is one of the basic concept but it is not to be
follow slavishly if new and improved technicians indicate a change in methods
timelines to update information of more use to recipient than outdate news
economy of presentation too many details can obscure.
The importance factors in accounts and comes difficulties in
understanding them. Completeness a rounded picture of the company activities is
The inconsistency in policy decision, the conflicts in the
implementation of the policies and the disclosure discrepancies between
policies and reports have caused to inferior in the formulation of this project
topic ‘application of accounting policies in public liability companies and its
effect on shareholders find with reference of Beta glass plc.
The research is necessary to finds out the courses of such
inconstancies and disparity in accounting policy decision, its practicability.
The efforts on financial statement and reports that distorts
the full and fair disclosure of accounting policies and its effects on
shareholders’ investment. Therefore any concept that has to do with resources
management be it cash or money worth, must be taken into consideration
especially, now that fraudulent practices and embezzlement of firms resources
in the public, municipal and private sectors are increasingly invading the
moral of the accounting profession. Hence any research like this one designed
to develop the process of accounting policy formulation, its implementation and
disclosure base and concepts can never be detrimental in any sphere of the
accounting profession for originating and reliability, this research will
provide adequate information as a tool for generation inspite of the fact that
the samples of the research are limited to one public limited company.
The Beta glass plc, the problem and prospects associated
with the disclosure techniques of the company holds for the other public
company or corporation.
1.2 Statement of
The present state of the act of accounting is such that we
have not yet arrived at producing specific financial report for each group
users, tailored to their specific needs.
Accounting policies that has been generally accepted have a
persuasive impact on the form and content for financial statement.
Information about the accounting policies adopted be a
reporting company is essential for financial for the financial statement user
and should be disclosed adequately. The referred place to disclosed accounting
is under captain summary of significant accounting policies, but in the 2001
annual report of Beta glass plc it is stated on the pages 12 and 13 with the
option accounting policies.
of the Study
The aim of the disclosure therefore is to bring the five,
the needs for unified accounting standards that are generally accounted. The
absence of some generally accepted rules each accountant will have to make his
rules. Adopts his own accounting policies. In order to achieved his own
This board principle relates to the basis accounting
function of recognition, measurement and full disclosure. It will be difficult
to compare one set of accounts with another. It is every me’s interest that the
business community uses ones set of rules in accounting for money.
The objectives of the research project under study therefore
would be to.
To determine the factor that is generally considered in the
determined and set of accounting policies.
To evaluate the effectiveness of accounting concept as tools
of achieving the application of accounting policies.
To find out the extent of the impact of political and
economic consequences on corporate disclosure.
To determine the
adequacy and the manliness of the reporting firm.
To suggest means by which corporate disclosure could be
improved to meet the need of the users of the financial information.
If it is to provide a base and authorization sources for
further research in the area of corporate disclosure.
For the purpose of this study, the following research
questions are formulated.
What factor determine of choice of accounting policies
adopted by firm?
To what extends are accounting concepts applicable in the
treatment of financial information?
Whether or to political and economic consequences influence
the extent or policy disclosure in financial statement?
Ho: Resources owners
should not be involved in accounting policy decision.
Hi: Resources owners
should be involved in accounting policy decision.
Ho: Accounting policy disclosure is not a function of
political economic issues.
Hi: Accounting policy disclosure is a function of political
Ho: Government intervention in corporate disclosure is not
as a result of its macroeconomic implication rather it is for the security of
Hi: Government inventions is corporate disclosure is a
result or its macroeconomic implication rather it is for the security of
Ho: The accounting policies developments are not dependent
on the type of the business and available resources.
Hi: The accounting policies development are dependent s on
the type of business and available research.
of the Study
The accounting system is a management information system
(mis) that is responsible for the collection and processing of data to produce
information useful to the decision makes in planning and controlling the
activities of an organization.
The research focus on the generation of funds amended
information which might be useful for developing and harmonizing accounting
standard practices and to facilitate the process of setting such standards.
It is hopeful that on completion or this research, the
following shall be achieved.
The accounting policy decision making process and factors
taken into consideration in the choice of accounting policies should be made
it will lead to
objective application and adherence to accounting concept and policies in
processing accounting transaction and information.
It will assists management in setting up a meaningful
disclosure to suits the needs of shareholders creditor government and other
user of the financial information.
Help management to buffer assist the political economic and
social consequences and their influence on corporate disclosure and the entire
It will also stand or a point or reference for management
when declining with related financial matter.
It will also help shareholders to know how find is managed
and how accounting policies affect dividend.
1.7 Scope and
It would have been very investing to carry out this research
study on all public liability companies. However due to time and financial
sufficiency the study is limited to one major company the Beta glass plc. The
study will cover the periods of 2008-2019 in the same vein the discussion
should be limited to the types of accounting policies operated by the company
and the responses to the research questionnaire developed for the study.
of the Study
This research cannot be regarded as totally perfect and
complete in all its classification as some difficulties were encountered in the
course of the study.
Inadequate availability of some vital maferious and the
limited time stipulated for carrying out this research pose a limiting factor.
Also the condition under which the project itself was carried out along side
with normal academics programme is another limiting factor.
Accounting policies: Accounting policies are the specific
principles and convention that are adopted by business enterprise for the
purpose of preparing their financial accounts for examples inventory valuation,
Accounting standards: Accounting standards are standards
used as guidelines set by professional accounting bodies to ensure uniformity
in the financial information export what is to be described or not in financial
Accounting bases: Accounting bases are the method, which
could be used in applying the concepts.
Accounting concepts: These are defined as broad assumption
that underlines the periodic financials accounts of the business enterprise.
Consolidation: This is the combination of two or more
companies into a new legal corporation with the original companies going out of
Annual reports: This is a report remind by statute
containing information on the activity of a firm cover a period of time usually
of year, showing the summary of income, expenditure and financial status of the
Users: These are interest group to who co-operate disclosure
are meant to serve.
Share/Inventory Holders: This set of people is placed on the
top of the companies who have set up because they are owners of the company who
have contributed and invested money towards the company business.
Investment: A sacrifice of certain present value for
(possible certain) future value it can be in financial assets and in the
IFRS = international financial reporting standards
SAS = statement of accounting standards
SSAP = statement of standards accounting practices
NASS = Nigeria accounting standards boards
IAS =international accounting standards
1.10 History of Beta
Beta glass plc was previously known as delta glass company
plc until 1995 that it was charged to its present named it was incorporated in
1974 with number RC 13215 but, started full operation in 1979.
Beta glass plc is a manufacturing and sales company which is
into the manufacturing and sales of hollow glass confirmers lantern globes and
With its head office in Iddo House, Lagos State and main
factory situated at Kilometer (km) 17 Warri Patani Road, Ughelli, Delta State.
Beta glass parent company is the Nigeria bottling company
plc with an authorized share capital of N35.6million (ordinary share of 50k each
and 34.97 million paid up). Beta glass plc formally called delta glass rose
from the second tier market to the first tier market in 1990 in the stock
exchange listings as a result of being a pioneer company shareholders
percentages of the company is Nigeria 41.5% and foreign 58.5%. The shareholders
structure was Nigeria bottling company plc 54.75% delta state government 12.6%
and the Nigeria citizens and associated 32.65%.
The company has 15 men of board of directions with chief
(D2) C.O Ogunbayo, C.ON as the broad secretary it has at 2,0011,186 employee
made up of to 252 management and 934 non – management categories and 7
expatriate and such as bottles, jars tumblers and mugs using raw materials such
as silica, saw, soda ash, limestone, feldspar, gypsum.
Beta glass has also won industrials awards such as Nis
certificate of quality.
Principal bankers are union bank of Africa (UBA) Eco- bank
prime merchant bank.
It runs it financial record year to 30th march every year.
But Beta glass plc is also into social responsibility such as reconstruction
and renovation of 16 glass room blocks in neighboring communities in and around
Ughelli and the sponsorship of the annual delta state marathon race.
Beta glass plc has over 4000 shareholders who have made
valuable capital investment into financing the companies operation and are also
waiting for a quantitative return on their capital invested.