and comprehensive statement describing financial activities of a business
organization such as the financial institutions.
Practices have in the recent past come
under great criticisms, demanding that accountants take further steps in ensuring that the true and fair view of the
actual worth of business are also incorporated in the financial statements published by them.
duty to fully disclose matters concerning their operations so as to aid
investors in making investment decisions.
organizations in addition to satisfying the legislating requirement tend to
retain existing investors and to attract potential ones through the publication
of their financial statements where the capital stock of a corporation is
widely held and its affairs are of interest to general public relations.
important information for a wide variety of decision, investors draw information
from the statement of the firm in whose security they contemplate investing.
acquiring total or partial ownership of an enterprise expect to secure returns
on their investment such as dividends and increase in the value of their
investment [capital gain].
the value of shares of company depends on the future profitability of the
enterprise. So investors are interested in future profitability. Past income
dividend data are used to forecast returns from dividend and increase in share
of balance sheet (for determining
financial position), profit and loss
statement (describes statement of
comprehensive income), statement of equity changes (explain the changes of the company’s equity), and cash flow statements (reports on
a company’s cash flow activities,
particularly its operating, investing and
financial statement are, to provide information about the financial position,
performance and changes in financial position of a firm that is useful to a wide
range of users in making management and investment decisions.
directors, employees, prospective investors, financial institutions, government
regulatory agencies, media, vendors and general public.
are often prepared according to national standards, corporate governance,
professional ethics, and code of ethics. This to avoid financial reporting
fraud and scandals that might hinders effective decision making process by
management and other users of reports.
financial accounting reporting with expected standards is to re-orientate
corporate organization on the need to abide by a code of conduct that facilitates
public confidence in their services.
practice by financial institutions to adopt creative accounting in anticipation
of sourcing for equity capital from the capital firms.
statement disclosure is the non-compliance to industry corporate governance,
ethics, and regulatory standards which is prevalent in the financial institutions
banks test, huge financial fraud and scandal occurred in commercial banks and
other financial institutions in Nigeria that led to service disengagement of
its Managing Director and Executive Director.
manipulating the company’s
financial records, book
padding scandal and corruption. This warranted CBN to review
and investigate all the financial institutions accounting records.
deliberate overstatement of the company’s financial position over a number of
years to the tune of billions of naira. The over-statements are directly
traceable to those systems abuses, violation of regulatory standards, in
particular, deliberate breaches of our accounting systems and controls.
financial statement on investment decision making of financial institutions in
Nigeria has some problems to both investors and managers of business
organizations who are either not aware of the importance of interdependence
relationship that exist between investors and financial organizations.
statement provides a way for a firm to present its financial health or
otherwise to shareholders, creditors and the general public and to potential
investors, to enable them make rational investment decision.
analysis in making investment decisions should not be overlooked as it helps
investors to establish the fiscal strength and weakness of a firm. Financial
statement analysis can reveal the red flags of an investment opportunity.
reveal the strength of a company as well as the potential profit of investing
with a particular company. By their nature, financial statements are
retrospective, which means an investor should never look at a single statistic
or metric in making investment decisions.
should ensure that all material facts as regard the assets and equity of the
organization should be reflected in their yearly financial statement. As such,
the financial institutions should adhere to the demand of subjecting their
financial statement to statutory audit as a way of authenticating their
prepared using such a language and terms a layman can understand because the
technical terms do not mean much to the investors. These should be prompt
provision of the financial statement at the end of each financial year and the
profit after tax should be reported precisely and correctly with actual figures
and avoid use of percentage to enable any layman make good investment decision.
should be maintained in preparation of financial statements to avoid faulty
investment decisions which could lead to loss of funds and possible