ABSTRACT
Source documents have a powerful function in the
accounts. They almost also have a strong line relationship with the preparation
of Financial Statements in any organization. Guinness Nig. Plc. was used as a
case study in this project. This study highlights the vital importance of
source documents in the accounting process. And how they form bedrock upon
which all accounting evidence and practice are based. Even the vital role they
play in the auditing of the books of account of any organization. From the
field research carried out it was discovered and confirm that source documents
were sacred in Guinness Nig. Plc. it was also confirm that source documents are
now not only paper based but also electronic based source documents. Both are
now strong part of record keeping process and backed by law and official
policies of organizations including Guinness Nig. Plc.
TABLE OF CONTENT
Content
Page
Title Page i
Approval Page ii
Dedication iii
Acknowledgement iv
Table of content v
List of tables viii
Abstract ix
CHAPTER ONE
1.0 Background of the study 1
1.1
History
Of Guinness Nigeria Plc 2
1.2
Statement of the problem 5
1.3
Research Question 6
1.4
Research hypothesis 6
1.5
Purpose of the study 9
1.6
Significance of the study 10
1.7
Scope and limitation of the study 11
1.8
Definition of terms 12
CHAPTER TWO
2.0 Literature Review 14
2.1
Introduction 12
2.2
The Meaning Of Financial
Statement 13
2.3
Features Of Financial
Statements 15
2.4The Meaning
Of Source Documents 16
2.5
Types Of Source
Documents 17
2.6 The Relevance of source document to
the preparation of
Financial Statement 21
2.7 An Overview Of Accounting Source
Documents 23
2.8 What Are Accounting Source Documents? 24
2.9 What Are Characteristics
Of Accounting Source
Documents? 27
CHAPTER THREE
3.0 Research
methodology 33
3.1 Introduction 33
3.2 Research design 34
3.3 Area of the study
34
3.4 Population of the
study 35
3.5 Sample and
sampling technique 35
3.6 Method of data
collection 36
3.7 Method of data
analysis 36
CHAPTER FOUR
4.0 Data presentation
and Analysis
4.1 Introduction 37
4.2 Presentation of
Data 37
4.2 Research Question 38
4.3 Test of
Hypotheses 47
4.4 Discussion Of Findings 50
CHAPTER FIVE
5.0 Summary,
conclusion and recommendation 53
5.1 Summary of
Findings 53
5.2 Conclusion 55
5.3 Recommendation 56
References 58
Appendix 1 60
Appendix 2 61
CHAPTER ONE
INTRODUCTION
1.0 BACKGROUND TO THE STUDY
Every organization requires
information on which to base decisions. And the role of accounting is to
provide that information in the form of accounting and financial reports.
However, financial statement or reports do not automatically generate
themselves, they are the end result of an accounting process.
The information
communicated to the owner via the reports is the product of the recording
system, which summarizes and classifies transactions. But the records themselves
are generated from the raw data provided in source documents. They provide the
facts on which all subsequent accounting information are based on.
Source documents have two
separate but yet related functions:
1.
They provide the
verifiable evidence of the details
of a transaction, thus ensuring that the information in the accounting reports
will be reliable.
2.
They provide the evidence
that is required by the Tax Office relating to the firm’s income tax and Goods
and Services Tax (GST) obligations.
Happily,
the roles of accountants in organizations have helped to correct possible
observed financial recording weaknesses in organizations. They have also helped
by improving the general performance of organizations by creating cost
consciousness, cost control and thus providing rational basis for business
decision making.
Managers prefer direct forms of
contact with their accountants because of the richness of verbal
communications. This is demonstrated in accountants’ use of visual and audio
cues, including reinforcing and adjusting techniques, which enhance the appeal
and utility of verbal communications. But it would appreciate that Accountants’
documents have been relegated to a supplementary function in the profession’s
communications process. Even small firm managers objectives do influence their
interest in and the use of accounting information that their accountant
provide.
1.1
HISTORICAL PROFILE OF GUINNESS NIGERIA PLC
The firm Guinness Nigeria Plc came into existence in the year 1950
with the sole aim of importing and distributing Guinness stout from Dublin for eventual sales in Nigeria. Due to the success of the
product in the country, it gave rise to a decision to establish a small brewery
in the year 1962.The foundation stone of Guinness Nigeria Plc was laid at Ikeja
on the 31st January 1962, by Arthur Benjamin Francis Guinness.
Guinness Nigeria
then was a subsidiary of the prestigious Diageo Plc of
the United Kingdom. The brewery was the first
outside of Ireland and Great Britain. Other branches of the brewery
have been opened over time – Benin City brewery
in 1974 and Ogba brewery
in 1982.
Guinness Nigeria Plc produces the following brands – Foreign
Extra Stout (1962), Guinness
Extra Smooth (2005) Malta Guinness (1990), Harp Lager Beer (1974), Gordon’s
Spark (2001), Smirnoff Ice
(2006), Satzenbrau (1995).
Guinness Nigeria Plc is a company that believes in enriching its
communities. This it has achieved by embarking on laudable Corporate
Social Responsibility projects
in several communities in Nigeria. These projects are Water of Life
initiative, which currently provides potable water to over 500,000 Nigerians
spread across several rural communities from Northern to Southern Nigeria;
scholarship and Guinness Eye Hospitals in three cities in Nigeria.
Nigerian Guinness is said to be twice as strong as the Irish
Guinness. In the 1800s, the Irish brewed the Guinness twice as strong, due to a
fear of evaporation on the long voyage to Nigeria. However, the alcohol did
not evaporate, and to this day Nigerians brew their Guinness twice as strong.
Guinness Nigeria limited became a public company In 1965 and was
one of the first companies to be quoted in Nigeria stock exchange with shares
being offered to Nigerian shareholders, 1200 Nigerian held 20% of the equity.
In 1971, a decision was taken to build a new Brewery at Benin at a cost 12million to brew larger beer,
this was the biggest brewery ever built in Nigeria.
The company believes that investment in the training and
development of its staff are wise investments. This has resulted in the
establishment of training centers in Benin
and Lagos
(Ikeja).
Following the ban on importation of barely the company has
conducted research into the use of maize and sorghum in place of malt in the
production of the different brands of beverages.
In the Nigerian market, Harp lager beer gained a remarkable
success alongside Guinness stout. Due to
its good quality too, received a wide patronage.
It was barely up to a decade of the brewery and marketing of harp
that its brand loyalists started shifting their interest to other branches. The
complain raised by customers was as a result of the carelessness on the part of
the brewers to eliminate particles discovered in the final product. There was a
major set-back suffered by Guinness Harp.
In the year 1995 a new product line “satzenbrau” was in the market
and it received attention in Lagos and Ibadan to be precise for
now.
In 1990 another product line “Malta Guinness”, was also introduced
into the market and it has received wonderful attention all over the country
and outside the country.
It indeed received acceptance and as such requires effective
management system, to guide against the future of all lines of product carried
out by Guinness Nigeria Plc.
www.Guinnessnigeria.com).
1.2 STATEMENT OF PROBLEM
The major problem why this study is
necessary is that, most organizations in Nigeria underestimate the potentials
and relevance of source documents. As a result many do not pay proper attention
to it. They do not know that failure to do this as well as errors in the
sources document may negatively affect the financial statement of the
organization. Therefore, there is the need to bring to the awareness of
organizations the relevance of source documents to the preparation of their
financial statements. And making them know that source documents provide the verifiable evidence of the details of a transaction, thus ensuring that the
information in the accounting reports will be reliable.
Another problem is
that, we know that source documents always are desired to assist in proving
organization’s extractions. But the problem is whether or not we can
count on their accuracy? The answer is often NO. Source documents
frequently contain errors. Some dates are usually wrong. Locations
are frequently wrong. Names may be wrong or spell wrongly.
1.3 RESEARCH QUESTION
To
find out whether source documents in an organization are important, the
following questions were raised:
1.
To determine if source documents are
relevant to the preparation of financial statement in your organization?
2.
Is there purpose for coordinating
source documents for transactions in your organization?
3.
How adequate are the source documents
and other books of account?
4.
Is the keeping of source documents
good enough to provide accountant with timely and reliable information for
decision making while preparing financial statement?
5.
What is the caliber of accounting
personnel employed to handle the processing of source documentation?
1.4 RESEARCH HYPOTHESIS
The
following research hypotheses formulated for this study will be empirically
tested and result gotten that will serve as a basis for recommendations. The
hypotheses are as follows:
HYPOTHESIS I
Null Hypothesis(Ho):
the keeping of source documents are not important and relevant to the
preparation of financial statement in organizations including Guinness Nigeria
Plc.
Alternative Hypothesis(Hi):
the keeping of source documents are very important and relevant to the
preparation of financial statement in organizations including Guinness Nigeria
Plc.
HYPOTHESIS II
Null Hypothesis(Ho):
There is no very importance purpose in obtaining source documents from all
transactions in organizations including Guinness Nigeria Plc.
Alternative Hypothesis(Hi):
There is a very importance purpose for obtaining source documents from all
transactions in organizations including Guinness Nigeria Plc Benin City.
1.5 OBJECTIVE OF THE STUDY
The
purpose of this research study is to examine the relevance of source documents
to the preparation of financial statement. To be able to establish this,
Guinness Nigeria Plc, Benin City,
is being used as a case study.
Also, to ascertain the level of importance on
the overall benefit that is derived by management in organizations. It will
bring to the awareness of organizations the relevance of source documents to
the preparation of financial statements. This will sensitize them to that source
documents provide the verifiable evidence of the details of a
transaction. Thus ensuring that the information in the accounting reports will
be reliable.
Other
objectives include:
1.
To explain the objectives of
coordinating source documents for transactions.
2.
To observe the adequacy of source
documentation and other books of account by an accountant.
3.
To ascertain the roles of
accountant in keeping of source documents to provide management with timely and
reliable information for decision making.
1.6SIGNIFICANCE OF THE STUDY
This
study will be significant to most organizations particularly small and medium
scale businesses. As it is aimed at showing the importance and relevance of
source documents and their documentation to the preparation of financial
statements. And will also make them to appreciate the crucial importance of
source documents as a tool for transactional evidence, an instrument of
auditing evidence, and the beginning process of a system of performance
measurement and reporting which is vital to an accountant and, in turn, vital
to business growth and expansion.
This
study will invariably be useful to Accounting students as the study generally
explained the importance of source documents to the preparation of financial
statement in organizations.
This
study could be of immense use to anybody who wants to gain some insight into
the importance of source documents to the preparation of financial statements.
1.7SCOPE AND LIMITATION OF THE STUDY
This
study source documents and their functions, types of sources documents, and
their importance to the preparation of financial statement in an organization.
The data collected is restricted to Guinness Nigeria Plc, Benin City. This is a limitation in itself
because source documents are used by all types of organizations.
Management
restriction: managements often are not willing to give out some vital
information that would have helped the researcher in getting the needed
information about the company. This was also a source of limitation to this project
work.
Time
factor:- The time given for the study to b concluded is considered too tiny to
carry out an exhaustive work.
Finance:-
This also was a major constraint because it denied the researcher the several
trips of field data gathering work.
1.8 DEFINITION OF TERMS
Efficiency:
This is a fact of performance which relate to the rate of resource utilization
(ie cost incurred in the course of the work. Ovuorie G (1997).
Accounting: An
act of recording, analyzing, summarizing and interpreting finance information.
Policies:
Koontz, O Donnell and Weihrich (1980) define policies as a general
statement or understanding which guide thinking and actions. The essence of
policies is the existence of discretion, within certain limits in guiding
decision and actions.
Source document:
Source document are details of the particulars of a transaction that include
the date, name, address, terms, product description and amount among other
relevant pieces of information.
Receipt:
this is a written document that confirms that money has been received as a down
payment, account settlement or installment.
Invoice: This is a document that is sent to request payment for money owed,
for goods that were delivered, or services that were rendered.
Accountant: According to Maskell &
Baggaley, (2003), An accountant is one who is skilled in the practice of
accounting and who is in charge of public or private accounts.
Financial Statement:
According to Anao A. R. (2004), a financial statement (or financial report) is a formal record
of the financial activities of a business, or other entity.