Abstract
The study examines the impact of accounting standard on financial reporting on Nigerian financial institutions. The broad objective of the study is to ascertain if there is relationship between accounting standards and the content and presentation of financial statements and also to find out if financial reporting information has a positive impact on the effective management of Nigeria banks. The local standards do not cover all the aspects of financial reporting encountered by prepare of financial statements.
The random sampling technique was used in selecting a sample size of l4 banks out of all banks quoted on the Nigeria Stock Exchange as at third quarter of 2015. The survey design was adopted in this study and a total number of 50 questionnaires were administered but 47 copies were returned completely. The t-statistics was adopted in carrying out the analysis of data. From the analysis of data collected, the result reveals that there is a positive relationship between accounting standards, its contents and presentation of financial statement in the banking sector. It is concluded that accounting standards have improved Nigerian banks on how they can prepare financial statement and presents it in line with the Companies and Allied Matters Act (CAMA) 2004 and other relevant accounting standards (IAS and SAS). Based on these findings, some recommendations among others were made that proper accounting standards be put in place by the relevant accounting standard setting bodies so as to ensure the preparation of high quality financial report or statement in the Nigeria banking sector.
CHAPTER ONE
INTRODUCTION
1.1 Background to the study
Section 335(l) of the Companies and Allied Matters Act CAMA 1990 as amended stipulates that the preparation of financial statement, shall comply with the accounting standards’ issued from time to time by the Nigeria Accounting Standard Board.Financial statements are described as the end product of accounting transactions or economic events aimed at providing qualitative and quantitative financial information to evaluate and predict the performance of an organization to permit informed judgment and decision making, (Illaboya, 2005).
In Nigeria, the standard setting body was the Nigeria Accounting Standard Board (NASB) which is presently referred to as the Financial Reporting Council of Nigeria (FRCN) which was passed into law On 18 May 2011 and was signed into law on 20 July 2011. The financial reporting council of Nigeria like all standard setting bodies in the world is independent of the profession of accounting. The council identifies areas where a measure of uniformity is required so as to bridge the variation in reporting practices and ensure a high level of uniformity which is panacea to corporate compatibility.The need for an accounting standard setting body in Nigeria became urgent when the Nigeria enterprise promotion decree was promulgated to transfer ownership of companies to Nigerians. Foreigners exploited the lack of uniform accounting procedures in valuing their equities in companies affected by the decree. Those companies, whose parents were resident outside Nigeria, followed the dictate of their parents.
At the end of it all, there were as many accounting practices reflected in the account as there were companies in Nigeria (Nnadi, 2007).Whenever an auditor challenged a company on the appropriateness of its accounting practices, management was usually quick to as the auditor to produce the law prohibiting such practice. The Nigeria accounting standard board presently known as the financial reporting council of Nigeria was therefore established in order to ensure that these conditions did not persist, (Nnadi, 2007).The Nigeria accounting standard board (NASB) presently referred to as Financial Reporting Council of Nigeria (FRCN) has been the body responsible for establishing standards of accounting and reporting in the Nigeria business enterprises. The board help to ensure that the published financial statements are uniform in content and format and communicate precisely what they purport to convey. These standards are in effect rules governing the preparation of financial statements. Accounting standards issued by the board are essential because they lead to efficient allocation of resources in the economy such that more successful companies are better able to raise capital to finance their operations than the less successful one.