Project Abstract

Project Overview

<p> </p><p>INTRUDUCTION</p><p>1.1 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>BACKGROUND OF STUDY</p><p>&nbsp; &nbsp; &nbsp; A farmer, who plants corps, expects<br>result, similarly to student who sits for examination expects results. The same<br>5 also true of an investor.</p><p>For the farmer, the result might be<br>communicated to him in the form of a bumper harvest. It result sheet or a<br>report card would usually sufficed for a student. However, in the of an<br>investor, the result is communicated through the financial reports.</p><p>&nbsp; &nbsp;<br>Financial reports are law to be prepared by every limited liability<br>company; these limited liability companies abound in virtually all sector of<br>the economy.</p><p>&nbsp; <br>Every company shall cause accounting records to be kept. The accounting<br>records shall be sufficient to show and explain the transactions of the company<br>and shall be such as to disclose with reasonable accuracy, at anytime the<br>financial position of the company.</p><p>&nbsp; <br>In the banking industry, financial reports are of great interest to the<br>general public because the banks directly or indirectly interact with people.</p><p>&nbsp; &nbsp;<br>This public interest has caused companies (including banks) to accept<br>social as well as economic, financial and legal responsibilities and has<br>created a consequence, a growing need for the communication of information to<br>account for the results which are of considerable interest a wide range of<br>individuals and organizations.</p><p>&nbsp; <br>So, it becomes very imperative for reliable information to be circulated<br>to interested parties which can enable them to acquire an essential knowledge<br>of the way is which companies particularly the bank are performing in relation<br>to the public interest. This fact is further educated by the recommendation of<br>the working party set up in Britain<br>by the Accounting standard committee in October 1974 under the chairmanship of<br>Derek booth man which took a study of the scope and aims of publisher financial<br>statements.</p><p>&nbsp; <br>The committee recommended that:</p><p>&nbsp; &nbsp; &nbsp; “The fundamental objectives of corporate<br>report are to communicate economic measurement of the reporting entity useful<br>to those having reasonable right to such information”</p><p>&nbsp; &nbsp; <br>It is not an over statement when one says that the banking industry is<br>the flume on which the national &nbsp; economy<br>rotates. This mammoth, impact upon a country economy therefore makes it a<br>public affair is everybody in the country has a right to know what such<br>organizations are doing, more so all information, necessary to explain the<br>organization’s activities fully should be provided in the annual reports.</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; One<br>of the most significant aspects of the information system of business<br>enterprises in an economy is that which deals with the communicate of financial<br>data, especially in describing business profitability and financial position.<br>This information is important because it attempts to partial the economic<br>resources of the enterprises and the financial results, which have been achieved<br>by its management when those resources have been put to use. It attempts to<br>reveal how effective management has been in resources utilization as well as<br>the financial reward available to compensate for risk taken by various<br>suppliers of capital.</p><p>1.2 &nbsp; &nbsp; <b>STATEMENT<br>OF THE PROBLEM</b></p><p>&nbsp; &nbsp; &nbsp; &nbsp; The genuineness or other wise of<br>financial reports has attracted diverse opinions from different quarters, such<br>opinions can come from the general public, tax authorities, shareholders,<br>creditors with long or short term interest, financial analyst and potential<br>investors.</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; They<br>argue that the financial reports do not usually give an accurate data about the<br>actionties of such business concerns, for example, the idea of stating assets<br>at their historical cost do not favour most investors as they argue that<br>inflation is not usually taken care of, though the real value of such assets<br>might have been eroded.</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Again<br>since the financial reports prepared by managements, the shareholders and<br>others argue that there would usually be some elements of bi as on the part of<br>management in the disclosure of management’s financial ineptitude.</p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; But<br>in any case the management claims that some inherent problems would usually<br>affect the accuracy of such reports. It is therefore the intention of this<br>researcher to delve into the matter to enable him establish a relationship<br>between financial reporting and performance evaluate in a bank.</p><p>1.3 &nbsp; &nbsp; <b>OBJECTIVES<br>OF THE STUDY</b></p><p>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; Companies<br>including those in the banking industry have had to face the onerous task of<br>presenting a credible and generally acceptable financial statement in their<br>annual reports, to the various people to whom they own such obligations. The<br>purpose of the study is:</p><p>a. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>To determine the various financial reports used by<br>banks.</p><p>b. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>To ascertain the problems of using financial reports<br>to assess performance of banks.</p><p>c. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>To examine the use of historical cost convention<br>adopted by banks in stating this balance sheet items on investors.</p><p>d. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>To determine of there’s a relationship between<br>financial reporting and performance evaluation of a bank.</p><p>e. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>To offer recommendations and solutions on the best way<br>financial reports could use in assessing bank performance.</p><p>1.4 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>RESEARCH QUESTIONS</p><p>a. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>What impact has financial reporting on bank performance<br>with respect to the financial position of the bank?</p><p>b. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>How does financial statement assess the bank<br>performance?</p><p>c. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>Does financial reports disclosed financial impetitude<br>of bank mangers to the shareholders?</p><p>d. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>What are the problems associated in using financial<br>reports to assess bank performance?</p><p>e. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; <br>How do we know a reliable financial report?</p><p>f. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>Has financial statement of banks influence your<br>investment decision?</p><p>1.5 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; RESEARCH<br>HYPOTHESIS</p><p>&nbsp; &nbsp; &nbsp; &nbsp; Base on the statement of problem and<br>objections of this research work the following general hypothesis are<br>formulated:</p><p>Ho &nbsp; &nbsp; Investment<br>decision, base entirely on the financial statement will not lead to poor and<br>lazy decisions.</p><p>Hi &nbsp; &nbsp; Investment<br>decision based entirely on the financial statements will lead to poor and lazy<br>decisions.</p><p>Ho &nbsp; &nbsp; The<br>efficiency of financial reports is great affected by inflationary trends in the<br>economy.</p><p>Hi &nbsp; &nbsp; The<br>efficiency of financial reports is not greatly affected by inflationary trends<br>in the economy.</p><p>Ho &nbsp; &nbsp; Financial<br>report are not a true in director of banks performance.</p><p>Hi &nbsp; &nbsp; financial<br>reports are a true in director of banks performance.</p><p>1.6 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; SIGNIFICANCE<br>OF THE STUDY</p><p>&nbsp; &nbsp; <br>The banking industry is a very important sector of the economy. This is<br>because banks can determine the direction of growth or development of the<br>economy trough the financial service rendered by banks. The financial services<br>which includes, funds mobilization, safekeeping and custodianship, funds<br>transfer, foreign exchange transaction equipment leasing, extension of loans<br>and advances, investment in securities, bill discounting etc.</p><p>&nbsp; &nbsp; &nbsp; Investment key sector of the national<br>economy of which the banking industry is one becomes a goal-getters priority.<br>Owing to this, it becomes necessary that financial reports presented by banks<br>satisfy the need of the users of the reports.</p><p>&nbsp; &nbsp; <br>Specially, at the end of this study, we shall &nbsp; have been able to establish:</p><p>1. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>Whether or not the financial reports affects<br>investment in the banking industry.</p><p>2. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>Whether or not the annual financial report currently<br>reflect the inflationary effects.</p><p>3. &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>Whether or not banks follow rigid accounting<br>practices.</p><p>&nbsp; &nbsp;<br>The emphasis of this research is not to discuss the determinants of<br>performance, but to establish a relationship between financial reporting and<br>performance so that potential investors is in banking industry may clearly<br>define the stand.</p><p>1.7 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<br>SCOPE AND LIMITEDATION OF THE STUDY</p><p>&nbsp; &nbsp; The<br>aim of the study is to examine, the use of financial reporting in assessing<br>banks performance, however it will be restricted to investigations carried out<br>on union bank of Nigerian Plc.</p><p>&nbsp; &nbsp;<br>To enable the research have a broad view, the study will not be based on<br>one branch. A study of some selected branches of the bank will also be carried<br>out.</p><p>&nbsp; &nbsp;<br>But in any case, the following among others are the numerous constraint,<br>while are envisaged;</p><p>LITERATURE: &nbsp; &nbsp; The dearth of related books and journals<br>will no doubt affect the quality of the research.</p><p>TIME: &nbsp; &nbsp; The greatest employer of man, which is<br>time was not in my favour through I manage it considering the time allocated to<br>my studies, fellowship and the project.</p><p>FINANCE: &nbsp; The research work generally involves money<br>but considering my stand as a student. I was limited by financial in achieving<br>my gim of have a population rather I found my self in using sample size, even<br>visit to my case of study.</p><p>RESPONSE RATE: &nbsp; &nbsp; &nbsp; The information to be analyzed in the<br>study will be limited to those who would <br>respond voluntarily to the questionnaire.</p><p>PAUCITY OF INDUSTRY: At the course of my research I come to<br>release that many banks dose not have any form inter-relationships which make<br>things difficult for me in using one set of information generated as touching<br>planning and control in UBN to generalize issues. That leads me into more research, which will<br>continue even after this profit.</p><p>1.8 &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; DEFINITION<br>OF TERMS</p><p>AUDITING: &nbsp; &nbsp; The objective examination of financial<br>statements initially prepared by management by a third party other than the<br>prepared or used with the goal of establishing the fairness of representations<br>made therein and reporting on same a guides to interested users.</p><p>ATTEST: &nbsp; To assume responsibility for the fairness and dependability for<br>the fairness and dependability of financial statements.</p><p>BANKRUPT: &nbsp; &nbsp; &nbsp; Inability of person to meet his liabilities as they mature.</p><p>FRAUD: &nbsp; &nbsp; Misrepresentation by a person to be untrue or made with reckless<br>indifference as whether the fact in true with the intention of deceiving the<br>other party and with the result that the other party is injured.</p><p>FINANCIAL STATEMENTS: &nbsp; This<br>covers balance sheets, income statement or profit and loss accounts notes and<br>other statement and explanatory materials.</p><p>GOING CONCERN: &nbsp; &nbsp; Continuing in operation for the foresable<br>future with the assumption that the enterprise has neither the intention nor<br>the</p><p>LIQUIDATION: &nbsp; Process of winding up of a company thereby brings to an end its<br>corporate existence.</p> <br><p></p>