CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

The impact of financial accounting reports on the corporate performance is becoming more apparent to users groups of financial statements.

        Accounting is not an exact science neither is business operations without some subjective and judgmental errors when it comes to reporting them. A financial report therefore is a document statement which informs the various interest groups to a business on the operations and performance of their business in a period under review its present state of affairs as well as its anticipated future, in accordance with the statues. If a financial report is to service its purpose it ought to be characterized by the following:

a.     Relevance

b.     Understandability

c.     Reliability

d.     Completeness

e.     Objectivity

f.      Timeliness

        In the accounting process of an organization is to provide the information required to prepare a financial report which shall have the above characteristics than the transaction during the period must be recorded promptly and accurately and interpreted in conformity with the Generally Accepted Accounting principles (GAAP), statements of Accounting Standard Board (NASB), international accounting standard committee and the companies and Allied matters Acts cops LFN (CAMA). Financial accounting reports become necessary with the obvious need for accountability of stewardship from the manage to whom investors entrusted their financial resources. The railway age in the UK. Occurred between 1830 to 1870 and the first time the world saw the emergencies of multimillion corporation with large number of share holder. It was a period of disorder but it brought the basis for the present day system of corporate financial report. Financial reporting is a duty of stewardship assigned to the director of a company by section 334 of the company and Allied matters Act cap L20 LFN, equally the mandatory responsibility of companies to keep accounting records derives its strength from section 331 and 382 of the same act. These sections explicitly defined the necessary content and manner in which financial records should be kept.

1.2     STATEMENT OF THE PROBLEM

The study “The impact of financial accounting reports on the corporate performance aims at investigating the financial report of selected companies in Enugu state with a view to determine the following.

a)          The extent to which a standard financial report contributes to or detracts from the growth of a business organization.

b)          The extent to which the financial reports of corporate business organization comply with statutory provision.

c)           The uniformity and conflict which exist in the financial accounting reports regulations given the multiplicity of regulators.

Therefore, based on the above statements, the researcher shall investigate the financial accounting reports standards and every regulation their bear on the financial statement and to the extent the selected company(s) has either complied with or disobeyed the relevant statues.

1.3     OBJECTIVE OF THE STUDY

The objectives of this study are to critically examine the financial reports of the selected company and to probe into the fundamental for their preparation as well as its presentation with a view to determining:

a)          The adequacy of the basis and the fundamental that guides us preparation.

b)          The degree to which the financial report meet the need of its various users.

c)           The extent to which the financial report conforms to the established standards.

d)          The influence that financial report has on business performance.

e)           Finally, to present suggestion and recommendations based on my findings.

1.4     RESEARCH QUESTIONS

In order to determine the impact of financial accounting reports on the corporate performance, it is pertinent to test the following questions;

1)          Does the information disclosed in the financial statements adequate to support good decision making?

2)          Does the disclosure requirement of the status affect corporate performance positively or negatively?

3)          Does companies comply strictly with the regulations?

4)          Does the financial report meet the needs of the various users?  

1.5     SCOPE OF THE STUDY

This study could have covered the impact of financial accounting report on corporate performance of all the sectors of the Nigerian economy but due to the challenges of such a task especially the financial resource with which to execute it, it is limited to braving industry. The study used in Nigerian breweries Plc Enugu.

1.6     LIMITATION OF THE STUDY.

The limitations of the study encountered by the researcher of this work are given as follows:

a)        The confidential nature of financial accounting information in the business organization posed as a problem to this study.

b)        The researcher was unable to reach all the members of the sample as a result of their frequent travels and busy schedule.

c)         The sample used in the research through representative but it relatively small compared to the population, as a result of lack of financial with which to carry out the research on a greater sample.

1.7     SIGNIFICANT OF THE STUDY

This study is very important one and most significant at this period of economic situation which has witnessed the collapse of giant corporate with impressive profit and loss accounts and balance sheet statement, because the financial report serves is a “Prima facial” evidence on the state of affairs at such companies as well as it’s performance and could be relied upon as a certificate because it had the audition certification, financial reporting could be done with every business, utmost good faith and diligence.

1.8     BRIEF HISTORY OF THIS COMPANY

The Nigerian Breweries Plc is a subsidiary of Heineken N.V. which has a 54.10% interest in the equity of company i.e. Nigerian Breweries Plc. The company, which is a publicity quoted, was incorporated on 16th November 1940 under the name of Nigerian Brewery limited. It was later named Nigerian Breweries Plc in 1990 when the companies and Allied matters Act of that year come into effect. The principle activities of the company remained brewing marketing and selling lager, stout, non-alcoholic malt drinks and soft drinks.

1.9     DEFINITION OF TERMS

AUDITOR:

A person who is qualified to examine the accounts of an organization to see that they are in order.

BALANCE SHEET:

A business as at a specified date

BANK:

A financial institution whose responsibility among others is to keep deposit for their client and customers.

GOVERNMENT:

An institution of the state whose responsibility is to maintain law and order in the society.

PRIMA FACIE:

Sufficient to establish something legally until disprove later.  

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