The Impact Of Financial Accounting On Corporate Performance Of Business

The Impact Of Financial Accounting On Corporate Performance Of Business

First Chapter Introduction

Context of the Study

Financial statement users are becoming increasingly aware of the impact of financial reporting on the corporate performance of a business organization.

Accounting is not an exact science, and neither are business operations devoid of subjective and subjective reporting errors. In accordance with the statutes, a financial report is a statement that informs the various interest groups of a business about the operations and performance of their business during the period under review, as well as its current state of affairs and anticipated future. If a financial report is to serve its intended purpose, it must be relevant, understandable, reliable, comprehensive, objective, and timely. Generally Accepted Accounting Principles (GAAP), Statements of Accounting Standards (SAS), International Financial Reporting Standards, and the Companies and Allied Matters Act (CAMA) must be followed if the accounting process of an organization is to provide the information required to prepare a financial report with the aforementioned characteristics.

Financial Accounting becomes necessary due to the need for administrators to account to business owners for their stewardship. Financial reporting is a duty of stewardship designated to the directors of a company by section 334 of the company and Allied Matters Act Cap L20 LFN. Sections 331 and 382 of the same act give companies the obligation to maintain accounting records. These sections defined explicitly the required content and organization of financial records.

1.2 STATEMENT OF PROBLEM

The purpose of the study titled “financial accounting; a panacea for the corporate performance of business organizations” is to investigate the financial reports of selected companies in order to determine the extent to which a standard financial report contributes to the growth of a business organization and the extent to which the financial reports of corporate business organizations comply with statutory requirements.

Consequently, based on the aforementioned assertions, the researcher must investigate the financial reporting standards and every regulation that affects the financial statement, as well as the extent to which the selected companies comply with pertinent laws.

1.3 OBJECTIVES OF THE STUDY This study’s primary objective is to investigate the effect of financial accounting on the corporate performance of Nigerian business organizations. However, the specific objectives of the study are:

a. To determine the extent to which a standard financial report contributes to the expansion of an enterprise.

b. Determining the extent to which corporate financial reports comply with statutory requirements.

1.4 RESEARCH QUESTIONS

To determine the effect of financial reporting on the corporate performance of businesses, it is necessary to pose the following questions.

How does a standard financial report contribute to the development of a business?

b. To what extent does a corporate business organization’s financial report comply with statutory provisions?

1.5 Statement Of Research Hypotheses

In this study, the following null and alternative hypotheses were tested:

Hypothesis One

The relationship between standard financial reporting and business development is insignificant.

The relationship between standard financial reporting and business growth is substantial.

Hypothesis Two

H0: the financial reports of business corporations do not comply with statutory requirements.

H1: financial reports of business corporations comply with legal requirements.

1.6 Importance of the Research

This study is of the utmost importance and relevance at this time, when companies with remarkable income statements and statements of financial position continue to face continuity issues. Financial report is “prima facie” evidence of a company’s state of affairs and performance, and can be relied upon as a certificate because it has auditors’ approval.

This study provides answers to the aforementioned questions, and the researcher believes that the findings will go a long way toward assisting other researchers in this field of study and enhancing the users’ understanding of the structure of published reports and accounts.

This study will benefit the numerous user groups of published financial statements in the following ways:

Potential Investors: These are organizations interested in committing financial resources to the acquisition of a company’s shares. The outcome of this study will equip them with the instruments necessary to evaluate the financial report of a corporation that affects them.

The General Public: This audience will benefit from this report by understanding that the business organization exists for them and not against them, and as such, it must fulfill all of its responsibilities.

This group consists of the Financial Reporting Council of Nigeria (FRCN), the Companies and Allied Matters Act (CAMA), the Banking and Other Financial Institutions Act of 1991 (BOFIA), and the prudential guidelines for licensed Banks. Insurance Act of 2003. The study will aid them in harmonizing and standardizing their operations.

4.The Employee Group consists of current, prospective, and former employees. 5.The Government, Including Tax Authorities, Departments Interested in the Financial Reports of Companies: The outcome of this work will be of great assistance to each of these user groups in advancing their respective interests.

1.7 Scopeand Limitation Of The Study

This study could have examined the impact of financial reporting on the corporate performance of all sectors of the Nigerian economy, but due to the difficulties of such a task and the lack of financial resources to carry it out, it is restricted to the bravery industry. The research utilized selected Nigerian companies.

The following are the limitations encountered by the researcher:

a. The confidential character of financial accounting information within an organization posed a challenge for this study.

b. Due to their frequent travels and hectic schedule, the researcher was unable to contact all of the sample participants.

c. Although the research sample is representative, it is comparatively small in comparison to the population due to a lack of funds to conduct research on a larger sample.

1.8 Definition Ofoperational Terms

According to Adeniji (2009), an auditor is a qualified individual who examines the financial records of an organization to ensure their accuracy.

Formerly known as a balance sheet, the STATEMENT OF FINANCIAL POSITION is now known as an income statement. A financial statement that depicts a company’s assets, liabilities, and shareholders’ equity (IFRS conceptual framework, 2010).

According to James (2008), a bank is a financial institution whose duties include holding deposits for its clients and customers.

According to Dibie (2010), the government is a state institution charged with maintaining law and order in society.

PRIMA FACIE: sufficient to establish something legally until subsequently disproven.

RESEARCHER: A person primarily interested in search knowledge.