THE IMPACT OF ACCOUNTING STANDARD IN PREPARATION OF FINANCIAL STATEMENT

THE IMPACT OF ACCOUNTING STANDARD IN PREPARATION OF FINANCIAL STATEMENT ( A CASE STUDY OF NIGERIA BOTTLING COMPANY PLC (N.B.C) ENUGU)

ABSTRACT

The impact of accounting standards in preparation of financial statement. The most common reports for external use are the  financial  statement, included in the annual reports to shareholders (owners) and potential investors. This financial statement are prepared to confirm with general accepted accounting principles. The purpose is to access and know the impact  of accounting standard in preparation of financial  statement also to know how effective and efficient these objectives has performed. The significant of this work is to reveal to the users of accounting standards the importance and economic effect of applying the standards in preparation of financial statement and also to act as a guide to the users. The  method  used in analysis of this work  were illustrated by the  use of simple tabulation, percentage distribution, chi-square was also used to test hypothesis. In conclusion the benefits derivable from compliance with accounting standard does not required any more emphasis. It contributed numerously not only to the companies or the business sector of the economy but also on the nation’s economy as a whole. The major recommendation is that non- compliance of accounting standards should not  be seen as a statutory offence but also as a criminal offence which can probably lead to the closure of the business as the business can be mislead by accounts that not properly prepares.

CHAPTER ONE

HISTORICAL BACKGROUND OF THE STUDY

An accounting is a rule of set of rules which determine the method or methods by which accounts should be prepared and presented. They are working regulations which are issued by a national or international professional bodies.

There are substantial number of alternative postulates assumptions, principles and methods available to a reporting entity for the preparations. Any of these alternatives on significantly effect its results, operations, financial position and changes thereof. The purpose of accounting standards is not to evolve basis  theory of accounting but compliment the  provisions of the companies act and other statutory  regulations necessary for the preparation, understanding, interpretation, and use of financial statement.

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With the advert of accounting standards and also having gotten both legal and professional backing, all hopes  are high that it will lad to more adequate financial reporting. It must be pointed clearly that if companies are to flourish and continue to enjoy stakeholders and public support. They must conduct their affairs  in an open and transparent manner. Accounting standards are  designed to promote transparency viz-a-vis probity, discipline and openness of financial statement. The NASS pronouncements have great influence on financial reporting and can be viewed as a source of law considering the statutory recognition giving to it by CAMA 1990. The substantial benefits accruing to companies for complying with relevant accounting standards amongst others includes the facilitation of comprises with other companies operating in the same sector and assisting analysis and lenders to gain a further understanding of the business leading to the possibility that they could  raise debts and equity financial of managerial rates.

The accounting standard in it’s entirely has made it important for financial statement to be realistic for usefulness and it is necessary that they are accounted for and presented with their substance and economic reality and not merely their legal forms. Another major responsibility is the preparation of the financial statement annually which must be in complaisance with the requirement of statement  of accounting standards which the internal auditor must confirm and report on.

1.2  STATEMENT OF THE PROBLEM

The burden of this investigation is to find out if good accounting practice is being adhered to in the preparation of financial statement and the impacts. But inspite of this however, there is this spate of non compliance with accounting standards resulting usually from the company.

  1. Does compliance with the accounting standard have any effect or benefits, on the Nigeria economy?
  2. Does accounting standard ensure that financial statement provide information relevant to the  decision making needs of its users?
  3. Is there any sanction or penalty to be the defaulters of the accounting standard and failure to disclose the reasons for department from it?

1.3  PURPOSE OF THE STUDY

The main purpose of this work is to access and know the impact of accounting standards in preparation of financial statement. Also to know how effective and efficient these objectives has performed.

Some other reasons for barking on the research work are as follows.

  1. To know the benefits of accounting standards.
  2. Standard to the decision making needs of its users in the organization.
  3. To determine the compliance of accounting statement/ record of organization with the accounting standards.
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1.4  THE SIGNIFICANCE OF THE STUDY

The accounting standards are developed to ensue a high degree of standardization in the published financial statements.

They provide the necessary information about how accounting should be presented in order to enhance the value of the contents and facilitate through understanding. The significance of this study to the academic world cannot be over-emphasis as this topic is becoming more important to students allied cover as they are usually subject to examinations question  of the institute of chartered Accountants of Nigeria (ICAN) and other bodies like the institute of bankers are directly based on the contents of these standards.

One of the most significance of this study is to reveal to the management of Nigeria Bottling company Plc (NBC) Enugu on the importance and economic effect of applying accounting standards in preparation of financial  statement and also to act as a guide to the accounting staff of the organization. Finally this study would also serve as a reference literature to future researchers on impact of accounting standards.

1.5  RESEARCH QUESTIONS

The research questions for the purpose of this research work are:

  1. Does the company’s financial statement in compliance with the accounting standards?
  2. What are the roles of accounting standard in the financial statement.
  3. Does the company employed a qualified personnel to handle the role of accounting work?
  4. How adequate is the financial and accounting department?

1.6  FORMULATION OF HYPOTHESIS

To determine the validity and reliability of the information gathered. The following hypothesis were formed.

Ho:   Accounting standard does not play any useful role in the preparation of financial statement of the company.

Hi:   Accounting standard plays useful roles in the preparation of financial statement of the company.

Ho:   Accounting standards has not brought about and benefits in the Nigeria economy.

Hi:   Accounting standards has brought benefits in the Nigeria economy.

Ho:   The company does not employ a qualified or professional accountant to handle the role of accounting work.

Hi:   The company employ a qualified or professional accountant to handle the role of accounting work.

1.7  SCOPE OF THE STUDY

The researcher limit it scope to the impact of accounting standard in preparation of financial statement and channeled it to Nigerian Bottling Company Plc (NBC) Enugu because of time constraint and financial problems.

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The needs for the standard, their process of production and make a general view on the historical development of accounting standards. The researcher also limit its scope to standard Board (NASB).

1.8  DEFINITION OF TERMS

Technical Jargon have been avoided as much as possible in the study some that could however not be avoided are defined here. In the contest, they are used words by the

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