Enhancing Public Confidence In Financial Reporting, The Role Of Corporate Governance

Enhancing Public Confidence In Financial Reporting, The Role Of Corporate Governance

Abstract

This study examined the role of corporate governance in organizations and how financial reporting can be used to restore public confidence. The purpose of the study was to determine the extent to which financial aid assists businesses in attaining their corporate objectives. In the course of accomplishing these objectives, a number of research questions arose, leading to the formulation of three hypotheses. The investigation focused on the corporate governance practices of Consolidated Breweries Nigeria Plc in Edo State. A total of 100 individuals were selected at random from the organization and given a questionnaire. According to the descriptive statistics that were conducted. The chi-square test revealed that audit report improved corporate governance in Nigeria significantly. It was also affirmed that financial reporting effectiveness significantly enhances corporate objectives. In conclusion, the results demonstrated that corporate governance helps to increase public confidence in financial reports. In light of these findings, conclusions and recommendations were formulated. The study strongly recommends that the auditor, in addition to being able to detect malicious acts and scandals in an organization’s finances, is also able to make recommendations to the board of directors, and that the neglect of this responsibility is an issue that must be rectified in order to strengthen corporate governance within organizations.

First Part

Introduction

1.1 Historical Context of the Study

Effectiveness of financial reporting is recognized as the engine that drives financial transactions and management (Howard, 2002:2). The financial report is the culmination of all corporate governance planning and operations. The report’s contents may then determine the audit’s reputation. This essentially means that the efficacy of a financial report is only justifiable if it can inspire confidence in the curiosity of its numerous shareholders.

In accordance with section 259 of the Company and Allied Matters Act (CAMA) of 2004, an auditor’s financial report may include “A report to it’s members the accounts examined by them and in every balance sheet and profit and loss account, and on all group financial statements, copies of which are to be laid before the company’s general meeting during the auditor’s tenure of office.”

Recognizing the significance of the final report, the auditing practice committee sponsored by the six main accounting standards and guidelines has made recommendations and provided a sample audit report that can be applied in a variety of situations (Alvin, 2007).

The significance of a company’s financial report cannot be overstated, as the auditor may be held accountable for what he states or does not state as his opinion on the accuracy and fairness of the financial statement of the company. And his duty may extend beyond his immediate client (Milky, 2008:2).

This study aims to determine how public confidence in financial reporting can be bolstered, as well as its implications for corporate governance. It also sought to determine how it influences the decisions of external users of the financial statement. External stakeholders include the government and potential investors.

Description of the Research Problem

Financial reporting cannot be deemed effective if the report is not delivered on time. This may represent the culmination of a great deal of work and effort over a lengthy period of time, yet it can be summed up in a few lines. This investigation endeavors to address the following research questions:

Financial reporting: Does corporate governance require it?

Do financial reports assist businesses in achieving their objectives?

Does the incorporation of corporate governance contribute to the public’s trust in financial reports?

The Purpose of the Study

This study aims to assess the function of corporate governance in boosting public confidence in financial report.

Additionally, the research investigation has the following interrelated goals:

Determine the significance of financial reporting in corporate governance

Determine the extent to which financial reporting assists organizations in attaining their corporate goals.

iii. To determine whether corporate governance aids in boosting public trust in financial reports.

For reports to have an impact in any organization, these assumptions must be true. The impact of this report would be evaluated for the purposes of informing, reporting, discovering, proposing ideas, and making suggestions.

1.4 Scope of the Research

This research is limited to financial reporting and corporate governance, with a focus on Consolidated Breweries Nigeria Plc.

The purpose of this research is to investigate the audit report in corporate governance in order to conduct an accurate investigation of the information pertaining to the various categories of employees in the various departments of Consolidated Breweries Plc.

The coverage period is between (2006 and 2011) five years.

1.5 Formulation of Hypotheses

A hypothesis is a speculative statement intended to demonstrate the validity of a relationship between two or more variables. Therefore, the following hypotheses have been developed for consideration:

In Nigeria, financial reports have not substantially improved the corporate governance process.

Hello, financial reports have substantially enhanced the corporate governance process in Nigeria.

2, Contra: financial reporting effectiveness does not significantly enhance corporate objectives

Hello: financial reporting effectiveness significantly improves corporate objectives.

Corporate governance does not increase the public’s trust in financial reports.

H1: Corporate governance increases the public’s trust in financial reports.

1.6 Importance of the Research

It is anticipated that the public and private sectors will find the findings of this study and other comparable studies on the topic of enhancing public confidence in financial reporting and the implications for corporate governance useful.

A significant outcome of this study would be to determine whether or not the financial reporting one objectives have contributed to the development of corporate governance in Nigeria.

1.7 Limitations of the Research

In conducting this study, the researcher limits himself exclusively to case studies. This is due to the limited time available for conducting research.

Insufficient funds for transportation of fathering data collection and their expansion in the research case.

The computation of data used in the compilation of their research paper has not been straightforward. The unwillingness of some executive officers to provide information and participate in a direct interview is a further issue that has come to light.

Lastly, the researcher’s focus is limited to the function of financial reporting and corporate governance in Nigeria as it relates to public confidence in corporate reporting.

1.8 Explanation of Terms

In conducting this investigation, the terms and their definitions listed below were utilized.

These include the balance sheet, profit and loss statement, sources and application of funds, value added statement, and a five-year financial summary, among others. It is the statement that conveys company information to those who have a right to receive it, such as shareholders, loan creditors, etc. It provides an indication of the company’s trading or operational performance and a snapshot of the company’s financial position at a specific date (section 331 CAMA).

Audit: audit is a Latin word that means “hear”; it is a process conducted out by qualified individuals called auditors on the accounts prepared by the management of organizations, parastatals, and establishments to ensure adherence to established rules or policy. The auditing standard Board defined audit as “the independent examination of an appointed auditor’s opinion on the financial statement of an enterprise in accordance with the terms of his engagement and compliance with any applicable statutory obligation and professional requirements.”

Audit report: this is a statement made by an independent auditor expressing his opinion regarding the truth and impartiality of the financial statements he has examined, as well as whether or not they comply with the applicable law.

The Auditing Standard Board defines internal control as the system of control, financial or otherwise, established by management to carry out the business of the enterprise or company in an orderly and efficient manner while ensuring adherence to management policies, safeguarding the asset, and ensuring the completeness and accuracy of records to the greatest extent possible.

Financial institutions: this study will focus on commercial banks with subsidiaries across the federation, i.e. banks engaged in commercial activities.

Auditing guidelines are intended to provide guidance on the following: (a) Procedure for applying auditing standards. (b) The application of auditing standards to specific items that appear on the financial statements of businesses. c) The implementation of auditing standards to specific industries, sectors, or service organizations. (d) Other matters pertaining to the correct execution of audit duties.

Corporate Governance: is an all-inclusive concept that endeavors to guarantee and institute credible foundational governance standards in the creation of wealth, in light of the preeminence that corporations have come to assume in privately- led economies.

REFERENCES

H.C.C. Ayin (2007). Nigeria agro press, standard auditing, government and small business corporations.

Howard, L.R., Auditing, Macdonald and Evans LTD, United Kingdom, 2002.

Milky, G. W. (2008). Auditing today, fourth edition, practice hall international, London.

STATUTORY BOOK

2004’s Company and Related Matters Act. Republic Federal de Nigeria The federal act of 2004 is the law.