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A STUDY ON THE IMPLICATIONS OF ETHICS IN FINANCIAL REPORTING ON MONEY DEPOSIT BANKS IN LAGOS
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INSTANT PROJECT MATERIAL DOWNLOADA STUDY ON THE IMPLICATIONS OF ETHICS IN FINANCIAL REPORTING ON MONEY DEPOSIT BANKS IN LAGOS
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
The idea that an entity's financial statements are subject to a set of rules dictated by established accounting principles, policies, methodologies, and systems is one that has broad support.
Accountants are required to use their best judgement in accordance with generally accepted accounting standards to decide how to reliably record transactions and events that are not explicitly addressed in an official statement.
So, the professional managers of these documents need to rein in their accounting ethics if they want to create a financial reporting template that is both formidable and generally accepted. Per Ikoh (2019).
Ethics are the moral principles that guide human conduct, according to Hornby (2020). Both concepts use the degree of similarity as a yardstick for what constitutes morally acceptable behaviour. Accountants' and auditors' reports must be accurate, trustworthy, realistic, and free of bias if they are to be believed by Salaudeen, Ibikunle, and Chima (2018). Recent events in business have cast doubt on the idea that ethical accounting practices correlate with reliable financial reporting (Salaudeen et al., 2018).
The purpose of financial reporting is to let users evaluate the reporting entity's financial and service performance, financial situation, and cash flows (Ezeani et al., 2022). Adherence to all applicable legal requirements, rules, common law, and contractual terms as they pertain to the evaluation of the reporting entity's financial and service performance, financial status, and cash flows, as well as the determination of whether to provide resources to or conduct business with the reporting entity.
Accounting professionals are entrusted with the responsibility of preparing financial reports. It is essential that they adhere to ethical accounting standards codes to ensure that these reports are accurate, timely, thorough, relevant, and genuine. This is supported by Ogbonna and Appah (2021), who argued that corrupt company operations have deep roots. It goes without saying that the decision-making process revolves around financial reports. For the purpose of assessing the organization's efficacy, profitability, sustainability, and progress, financial reporting is essential. Therefore, an accountant's moral decisions have consequences, both for his own life and the lives of others. According to Talebnia, Salehi, and Jabbarzade (2021), there is a limit to the quality of financial reporting when it comes to the honesty of an entity's financial reports, economic condition, and functions as measured over time. It is well-known that business practices, surroundings, and culture can influence the value of financial reporting and, by extension, confidence in it, to different degrees (Gois, 2018).
According to research by Ogbonna and Ebimobowei (2021), which examined the relationship between accountants' ethical compliance and the performance of listed companies in Nigeria, the quality of financial reporting and organisational performance were both positively and significantly affected by accountants' compliance. People have a lot of faith in the financial reports that are audited by certified public accountants because they believe that these reports are based on thorough consideration of professional ethics and standards of conduct (Adeyeye, Adeyemi and Otusanya, 2020). Accounting ethics, in other words, should have an effect on the reliability of financial reports.
People make their financial decisions based on the financial statements that accountants provide. According to Salaudeen, Ibikunle and Chima (2018), accountants and auditors must present information that is effective, dependable, realistic, and unbiased if it is to be taken seriously. Accounting ethics and the accuracy of financial reports do not appear to have a strong correlation in the business sector, according to recent events (Salaudeen et al., 2018). According to Saladeen et al. (2018), accountants' ethical attitude and the implications of their activities are no longer considered when reporting financial performance.
As an example, according to Verdi (2019), financial reporting quality is "the accuracy with which financial reports communicate details about the company's activities, especially its cash flows, to educate stockholders." All things considered, it is explicitly suggested that financial statements must reflect the reporting entity's economic situation. Therefore, accountants lacking in ethics can impair the quality of financial reporting, particularly from the standpoint of protecting shareholders, in order to prioritise monetary gain.
In addition to their direct clients, accountants have duties towards other groups, including the public at large, the government, vendors, shareholders, creditors, debenture holders, and workers (Appah, 2020). Following the established norms of accounting requires accountants to act ethically. Because ethical actions include moral considerations, accountants and people who rely on their data should be concerned with professional ethics (Klai & Omri, 2021). Improving the quality of financial reporting is likely to be the result of the accounting community working to establish and uphold professional ethics. One rationale for this study is investigate the investigating a study on the implications of ethics in financial reporting on money deposit banks in Lagos.
1.2 Statement of Problem
Occasionally, accountants face moral quandaries (Babayanju, et al., 2017). As they go about their work, accountants face temptations to make moral judgements. Professionalism in accounting is predicated on accountants' adherence to ethical standards and their determination to keep public and private interests separate (Babajanyu, et al, 2017).
According to Joseph and Dike (2014), accountants' disregard for the standards set by financial report readers and their inherent scepticism is a major factor in the demise of some companies in the business world. Accountants' financial reports have come under more scrutiny due to examples of business collapse and scandal. The failure of these business entities, according to Aguolu (2018), was caused by accountants not following the rules of conduct that were evident in the financial statements and how reliable they were to end users. Therefore, these financial statements need to be presented with the necessary care. Recent discussions have included a wide range of ethical concerns, including but not limited to: dealing with insiders, maintaining neutrality, accepting gifts, etc. According to experts, the credibility of the financial accounts is affected by all these moral concerns. Authors: Joseph and Dike (2014). An ethics committee, charged with discussing and resolving ethical concerns and maintaining the organization's ethical standards, is a requirement of the revised and reprinted Corporate Governance Code (2011). Unfortunately, this has not worked as intended because many scandals that rocked businesses in the last century had their roots in unethical practices, such as when auditors and upper-level management put their own interests ahead of the organization's (Gois, 2018). Because of this disconnect between theory and reality, it is essential to assess the ethical concerns of businesses and how they affect the reliability of their financial reports. Therefore, the purpose of this project is to find out if accounting ethics affects the reliability of financial reports.
All Nigerian registered organisations are required by law to have an ethical committee according to the Corporate Governance Code (2011). Addressing ethical issues and promoting ethical ideals within an institution are two of the main responsibilities of the ethical committee. According to Ezeani et al. (2022), the composition of ethical committees has not yielded good results, even if several business crises have been associated with ethical issues. Among the few instances of corporate scandals that occurred in the past hundred years, there were the following: the overstatement of financial reports by Cadbury Plc; the omission of African Petroleum's N22 billion debt burden from those reports; and the conspiracy to commit fraud by banks with internal auditors (Enofe et al, 2019). When these crises are properly evaluated, it becomes clear that they are the outcome of a lack of adherence to ethical values.. Therefore, investigating the implications of ethics in financial reporting on money deposit banks in Lagos.
1.3 Objectives of the Study
The general objective of this work is to investigate a study on the implications of ethics in financial reporting on money deposit banks in Lagos. However, the specific objectives are stated as follows:
i. Determine whether objectivity as an accounting ethical principle influences the quality of financial reporting in money deposit banks in Lagos.
ii.Determine whether integrity as an accounting ethical principle influences the quality of financial reporting in money deposit banks in Lagos.
iii.Determine whether professional independence as an accounting ethical principle influences the quality of financial reporting in money deposit banks in Lagos.
1.4 Research Question
The study will be guided by the following questions;
Does objectivity as an accounting ethical principle influence the quality of financial reporting in money deposit banks in Lagos?
Does integrity as an accounting ethical principle influence the quality of financial reporting in money deposit banks in Lagos?
Does professional independence as an accounting ethical principle influences the quality of financial reporting in money deposit banks in Lagos?
1.5 Research Hypotheses
Ho1: Objectivity as an accounting ethical principle does not have significant influence on the quality financial reporting in money deposit banks in Lagos.
Ho2: Integrity as an accounting ethical principle does not have significant influence on the quality of financial reporting in money deposit banks in Lagos.
Ho: Professional independence does not have significant effect on the quality of financial reporting in money deposit banks in Lagos.
1.6 Significance of the Study
This study will be of immense benefits in multiple ways. First, it will educate stakeholders from different organisations about how to uphold their stipulated ethical principles to prevent business failures and corporate scandals. Second, it will encourage accountants to adhere strictly to accounting ethics codes in order to have certain aspects of reliability prepared and provided by them in the financial reporting template. Third, the research through its results will help organizations ' stakeholders make essential investment, finance, and dividend choices to support their organization's general corporate performance. Fourthly, it will instill the spirit of professionalism, truthfulness, sincerity and integrity among accountants as they recognize that involvement in fraudulent practices is tarnishing their private reputation, professional reputation and hampering the authenticity of financial information that they release. Finally, this research will function as a guide for learners, researchers and scholars who may be prepared to carry out further research on the topic.
1.7 Scope Of The Study
The study covers a study on the implications of ethics in financial reporting on money deposit banks in Lagos. The scope of this study is limited to data from nine (9) money deposit banks with international authorization in Lagos State. The research work was so limited because of the limited availability of data and time. It also covers some of the publications of the Institute of Chartered Accountant of Nigeria (ICAN).
1.8 Limitation Of The Study
Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.
1.9 Definition of Terms
Ethics: This refers to a set of moral principles, especially ones relating or to or affirming a specified group, field or form of conduct.
Accounting Ethics: This is primarily a field of applied ethics and is part of business ethics and human ethics. Accounting ethics studies moral values and judgments as they apply to accountancy.
Financial Report: Financial report (or statements) is a formal record of the financial activities and position of a business, person or other entity. Relevant financial reports such as balance sheet, income and expenditure statement, statement of retained earnings and cash flow statements, must be presented in a structured manner which must be easily comprehensible to the end users.
Objectivity: Objectivity entails that financial report must be independent and supported with unbiased evidence.
Integrity: Integrity implies that financial report must be accurate, reliable and truthful.
Professional Independence: This refers to freedom of professional accountants from control or influence of another party or stakeholder. It implies that professional accountants must be given the free-hand to prepare financial reports devoid of internal and external interference.
This material content is developed to serve as a GUIDE for students to conduct academic research
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