THE EFFECT OF ACCOUNTING ETHICS ON THE QUALITY OF FINANCIAL REPORTS OF NIGERIAN FIRMS
Abstract
This study examines the relationship between accounting ethics and financial reporting quality in the Nigerian brewing industry. The study explicitly assesses the impact of ethical accounting principles of disclosure, objectivity, and integrity on the quality of financial reporting of selected companies in the Nigerian brewing industry. Primary data were used in this study. Data were obtained from a structured questionnaire administered to 120 accountants from his six selected brewing companies in Nigeria. Data were analyzed using descriptive statistics and linear regression analysis. The results are ethical accounting principles of disclosure (β=0.887; R2=0.936; p<0.05); objectivity (β=0.896; R2= 0.952; p<0.05); completeness (β=0.768; R2=0.917; p <0.05); professional independence β=0.730; R2 = 0.895; p<0.05) and competency (β=0.868; R2=0.934; p<0.05) significantly affect the quality of financial reporting of the selected organizations. Among other things, the study suggests that accountants must adhere fully to ethical principles in carrying out their responsibilities to produce high-quality, reliable, and credible financial reports.
chapter One
Foreword
1.1 Research background
Definitions of “ethics” have been given by various literary figures. Fisher and Lovell (2003) see ethics as a branch of philosophy focused on formal scholarly reasoning about what is right and what is wrong. Hornby (2010) defines ethics as the moral principles that guide human behavior. The similarity of both definitions is the standard for measuring morally acceptable behavior. Babayanju, et al, (2017) distinguish between values and ethics, and argue that formal beliefs about right and wrong that guide humankind’s daily activities are principles and standards of thought derived from theories of ethics. provided and won. More than a problem. The concept of ethics is interdisciplinary. Almost every profession has some ethical principles that govern its activities. In the world of accounting, there is accounting ethics. Business has business ethics, medicine has medical ethics, engineering has engineering ethics, and the legal world has legal ethics. The advantage of ethics in each of these professions is that it creates a template of acceptable professional behavior that guides members in carrying out and performing their duties, particularly to customers and the public at large.
In 2002, Sarbanes pressured the U.S. Congress to promulgate the Oxley (SOX) Act because of the lack of credibility in financial information produced by auditors (Enofe, et al, 2015). These laws include the establishment of the Public Accounts Oversight Board to ensure a solid foundation of ethics training so that accountants can make sound ethical decisions when faced with unpleasant decisions. was High rates of fraud, coupled with high rates of corruption in both the private and public sectors, have led accountants to adhere to strict codes of conduct. In support of this, Ogbonna and Appah (2011) found that corruption is so entrenched in the business world that accountants responsible for preparing financial reports must comply with the Code of Ethical Accounting Standards for accuracy. argued that full compliance with the Timely, effective, comprehensive, relevant and reliable financial reports. Financial reporting is central to the art of decision-making. Various stakeholders in an organization require financial reports to assess the performance, profitability, profitability and progress of such organization.
1.2 Problem
Accountants sometimes face an ethical dilemma. In the course of their work, accountants encounter situations in which they are tempted to choose between right and wrong. Accountants’ claims to professionalism are based on adherence to ethical principles and a willingness not to confuse responsibility for the public interest with personal interest (Babajanyu, et al, 2017).
Each profession has established ethical standards that govern the conduct of its members. The reason for this lies in the constant corporate scandals in Nigeria’s business environment, as Ogbonna and Appah (2011) argue. A lack of ethical considerations can hinder an organization from achieving its goals. Joseph and Dyke (2014) argue that the failure of some organizations in the corporate scene is due to the inability of accountants of such organizations to adhere to the codes of conduct contained in the content of financial reports, and ultimately to their skepticism. I have confirmed that the theory is the cause. user. Cases of business failures and scandals have led to closer scrutiny of financial reports prepared by auditors.
The Corporate Governance Code (2011) requires all organizations registered in Nigeria to have an ethics committee. Ethics committees face the task of advising on ethical issues and promoting ethical principles within an organization. The composition of the Ethics Committee has not led to the desired results. Some of the corporate scandals perpetrated over time relate to ethical issues (Ezeani, et al., 2012; Festus & Temitope, 2016). One of the few corporate scandals to occur in the last decade is his manipulation of Enron Plc’s financial statements due to a lack of management autonomy. Overstatement of Cadbury Plc’s audited financial statements. African Petroleum has excluded from its financial statements her N22 billion debt burden and bank collusion with external auditors to commit fraud (Enofe, et al, 2015). A proper assessment of the above scandals indicates that their occurrence is the result of non-compliance with ethical principles. Therefore, there is a need to assess the ethical issues of accounting professionals and their impact on the quality of financial reporting.
1.3 Purpose of the survey
The main objective of this study is to critically examine the impact of accounting ethics on the quality of financial reporting of Nigerian organizations through case studies of selected brewing companies. Specific goals are:
It examines the impact of disclosure on the quality of financial reporting by a Nigerian brewing company.
A survey of the impact of objectivity on the quality of financial reporting by Nigerian brewing companies.
A survey of the impact of honesty on the quality of financial reporting of Nigerian brewing companies.
Evaluating the impact of professional independence on the quality of financial reporting of Nigerian brewing companies.
An assessment of the impact of competencies on the quality of financial reporting of Nigerian brewing companies. 1.4 Research question
Interesting questions related to research objectives include:
How do disclosures affect the quality of financial reporting for Nigerian brewing companies?
How does objectivity affect the quality of financial reporting for Nigerian brewing companies?
How does honesty affect the quality of financial reporting for Nigerian breweries?
How does professional independence affect the quality of financial reporting for Nigerian breweries?
How does capacity affect the quality of financial reporting for Nigerian brewing companies?
1.5 Research hypothesis
The operational hypotheses that guide the study are:
H01:
Disclosure as an ethical accounting principle has no material impact on the quality of financial reporting by Nigerian brewing companies.
H02:
Objectivity as an ethical accounting principle does not significantly affect the quality of financial reporting by Nigerian brewing companies.
H03:
Integrity as an ethical accounting principle has no material impact on the quality of financial reporting by Nigerian brewing companies.
H04:
Professional independence does not significantly affect the quality of financial reporting for Nigerian brewing companies.
H05:
Competencies have no material impact on the quality of financial reporting of Nigerian brewing companies. 1.6 Validity of research
Ezeani et al. (2012); Joseph & Dyke (2014); Ogbonna and Aper (2011); Babayanju et al. (2015); Nwagboso (2008) and Festus & Temitope (2016) conducted a study aimed at assessing the impact of accounting ethics on the quality of financial reporting of Nigerian firms. Almost all of these studies focus on the financial sector, thus excluding manufacturing, of which brewing is a subsector.
This research is very informative in several respects. First, it informs stakeholders of various organizations on how to adhere to established ethical principles to avoid corporate failure and corporate scandal. Second, accountants must strictly adhere to codes of accounting ethics in order to have an element of credibility in the financial reports they prepare and provide. Third, the research uses research findings to help organizational stakeholders make key investment, financial, and dividend decisions to support the organization’s overall performance. Fourth, accountants realize that engaging in fraudulent practices damages their personal and professional reputations, which also affects the credibility of the financial information they disclose, so they must practice professionalism, integrity, and honesty. , and a spirit of integrity inspire accountants. Finally, this study serves as a guide for students, researchers, and academics seeking to do further research on this subject.
1.7 Scope of investigation
This study examines the impact of accounting ethics on the quality of financial reporting of Nigerian companies, with an emphasis on the Nigerian brewing industry.
1.8 Definition of key terms
ethics
It refers to a set of moral principles, especially those that relate to or affirm a particular group, region, or action. accounting ethics
This is primarily an area of applied ethics, part of business ethics and human ethics. Accounting ethics examines the moral values and judgments associated with accounting.
financial statement
A financial statement (or financial statement) is the formal record of the financial activities and status of a company, person or other entity. Relevant financial reports, such as balance sheets, income and expense statements, retained earnings statements, cash flow statements, etc., should be structured and presented in a way that end users can easily understand.
Objectivity
Objectivity means that financial reporting must be independent and supported by unbiased evidence. Disclosure
Disclosure refers to additional information that accompanies an organization’s financial statements, usually as a description of activities that have materially affected the organization’s financial results.
majesty
Integrity means that financial reports must be accurate, reliable and truthful.
professional independence
This means that professional accountants are free from control or influence.
Leave a Comment