ABSTRACT
The objective of this study
is to access based on empirical research the exceptional qualities or otherwise
of the present accounting principles and standards.
Information was drawn from both
primary and secondary sources. The primary sources were held with members of
institute of chartered accountants of Nigeria (ICAN) on the subject matters.
During the time, question on the general field of accounting principles and
development were asked. The rest of the information came from library
sources. The information collected was
analysis using simple tabular diagrams, percentages, ratio and statistical
tools chi-square. The result obtained from this study is that the present way
of evolving accounting principles and standard from the beginning which dates
back to 600BC has not been very helpful. The study also revealed the economic
life of business differ significantly so that the purpose or aims of financial
reports are not the same everywhere. All these have resulted to display in the
financial report between accounts.
Although, it is evident that a quest deal of success has
been recorded by the accountancy, bodies worldwide, in standardizing existing
standards. This project recommends that a standard based on contemporary
problem and fashioned for the immediate or particular business environment be
evolved. It is hoped that when the points mentioned above are fully implemented,
the accountancy profession, especially in Nigeria which is currently being
threatened by existing laws in the country, can effectively render those
necessary committee it owes to the public it services. By way of reward for the
this services, the future existences of the profession would be guaranteed as
it would remain ever strong and reliable.`2
LIST OF
TABLES
Table 1: Statement
of standard Accounting practice (SSAP)
Table 2 Reconciliation
Table 3 Questionnaire administrative and
received
Table 4 The
disclosure of Accounting Policies and information and the producers and users
in the understanding and interpretation of financial statement and the making
of economic decision (SAS) 1 and 2
Table 5 Does the
use of several method for valuing and reporting stock, give rise to wide differences in total result of the operations of enterprises
in the same line of business (SAS4)
Table 6 Will the
accounting for employee retirement benefits help in determination of the amount
due to employees before or after the date of implementation of plans (SAS8)
Table 7 Will the
accounting for depreciation provide a guide for uniform and acceptable method
of determining and reporting depreciation on items? (SAD9)
Table 8 Is there
need for review of the accounting principles
and standards to reflect contemporary problem?
Table 9 The
environment of the practice of accounting profession as presented by the
companies and Allied matters decreed is a result of tact of trust in the
professional accounting in Nigeria
Table 10 In your
own opinion were the thirteen standard launched by the Nigeria Accounting
standard board (NASB) actually developed by were they mere modification of UK
SSAPâ€
Table 11 Is there
need for a review of the accounting principles and standards to reflect
contemporary problems?
Table 12 The
encroachment of the practice of accounting profession as presented by the
companies and allied matter decree is as a result of lack of trust in the
professional competence of professional accountants in Nigeria.
Table 13. Chi-Square
table
Table14. Chi-Square
table.
TABLE OF CONTENTS
Title
page ii
Approval
page iii
Dedication iv
Acknowledgement v
Abstract vi
List
of tables viii
Table
of contents x
CHAPTER ONE
Introduction 1
1.1 overview
of study 1
1.2
Statement of problem 5
1.3
Objective of study 6
1.4
Hypothesis of the research 7
1.5
Significance of the study 8
1.6
Limitation of the study 9
1.7
Definition of terms 9
Reference 12
CHAPTER TWO
Review of related literature 13
2.1 Historical
development of accounting 13
2.1.1 The early financial accounting 13
2.1.2 The venture accounting 15
2.1.3 The joint stock company 16
2.2
Development of accounting principles and standards 18
2.3
Recent revisions to accounting standards 23
2.4
Foreign currency transaction and conversion 25
2.5
Accounting for depreciation 26
2.6
Accounting for lease and hire purchase 28
References 31
CHAPTER THREE
Research methodology 33
3.1 sources
of data 33
3.1.1 Primary data 33
3.1.2
Secondary data 33
3.2
Population and sample size 34
3.3
Methodology used 35
CHAPTER FOUR
Presentation and Analysis of Data 38
4.1
presentation and analysis of an empirical research
into
the
accounting principle and standards 38
4.2
Testing of hypothesis 46
CHAPTER FIVE
Summary of Finding Recommendation and Conclusion 62
5.1 Recommendation 64
5.2 Conclusion 67
Bibliography 68
Questionnaire 71
CHAPTER ONE
1.1 OVERVIEW OF STUDY
The hall mark of a
profession is its commitment to the public service. The commitment can be classified into
three. Firstly, there must be
satisfaction of the society being served, secondly there must be professional
pride invite craft and thirdly the profession should be accorded recognition be
fond its national boarders.
If we go
down into memory, we discover that the need for better accounting principles
and standards is a world wide phenomenon, for instance, Noel Hyndman and Robert
kink (1989:20) said that one of the main reasons for the dearth of new
standards and revisions of same is the fact that the accounting standard
committee (ASC) like other standard setting bodies now begin to investigate accounting
topics which are extremely controversial.
Invariably, most of the new standards involve significant adjustments to
both the profit and loss account and the valuation of assets and liabilities in
the balance sheet.
Again, Noel
Hyndman and Robert kink (1989:42-44) on then part saw from every practical
objective level, most countries have disconvered lack of clear statement of the
aims and purpose of financial reporting as the major, short coming in the
standard setting processes. According to
Hyndman and kink, and citing germany
as an example, “financial statement are considered as one of the most important
vehicles for communicating with people who have financial interest in business
enterprisesâ€. The art of accounting in
this circumstances unlike the (former) is to provide a reliable and relevant
information to the interested parties.
Explaining
his own reaction on the global effect of clear statement of the aims and
purposes called, “in the united states for example, the stock market crashes of
1929 and 1969 which was blamed on financial report by companies first triggered
the estblishment of accounting standard
in that countryâ€. He went further to say that in the U.K, like Nigeria the establishment of accounting standard
committee (ASC) by the six professional bodies were ignited by lack of uniform
Nigerian situation was made worse by the Nigerian enterprises promotions decree
which attempted to transfer ownership of companies to Nigeriaâ€. Foreighers exploited the lack of uniform
accounting procedure in valuing their equity in corporations affected by the
decree. Practicing accountant is faced
to go down memory lane once more, he may admit that the problem emanated from
their evolvement of those principles and standards that date back to 600 B.C.,
when accounting as a practice came into being.
Ordinarily, he may resolve that all it takes to improve on the
principles is a fough body of accounting standards. But could these forestall the disasters in
the accounting world most especially in our country?
Today, the
disaster is becoming more real than apparent in Nigeria with the introduction of
the secondary foreign exchange market (SFEM), the recent open market operation
(OMD) and foreign exchange market (FEM).
According to Okpechi 91990:5) this system has brought in its wake a lot
of pressures on management of companies to show profits in the fact of rapidly
dwindling revenues. Accounts are most
likely going to be massaged and manipulated to show favourable result. Once more, it is in this regard that
accounting standards of measurement and
reporting and the need for more to be more responsive to developed principles
assume greater importance.
If members
of the profession feel that the present principles and standards have not
altogether done much good, shall helplessly ching to them or find something
that would be benefical to helping to achieve consistency between
standard. After all December 20th
century dictionary (1985:1022 AND 1261) pointed out the three major qualities
of all principles and standard, it defined principles as “consistent regulation
of behaviour accord go moral law†and standards as accepted authorities
statement of adequacy required.
According to Oxford English Dictionary second edition volume xii
(1991:499) principles is defined as a “general law or rule adopted or professed
as a guide to action, a settled ground or basis of conduct or action,
especially one consciously recognized and followed and standards as a definite
level of excellence, attainment, wealth or the lay or a definite degree of any
quality, viewed as a presaribed object of ondeavour or as a measure if what is
adequate for some purpose. Form the
foregoing, one may deduce that principles or standard is consistency applied if
it provides adequate treatment for items in question. The adequacy assume its acceptability and the
circle contnues here lies our problem.
The primary aim of this project, therefore is to find something we could
expect would lead to a cutting back of alternative treatments in a longer term. In the short come closer to which could be
regarded as our yearning principles or philosophy. Put simple a better account standard evolved
to solve our immediate problems. This
standard is also expected to fit into the economic like of particular place in
question
1.2 STATEMENT
OF PROBLEM
Okpechi statement presents
one of the problems of this thesis. I
have been tempted many times, to dispel certain newspaper misconception about
why the Nigerian accounting standard Board was established and how. The standard developed so far are carbon
copies of those produced elsewhereâ€â€¦
(Okpechi
1990:2)
so, the first of the needs of this
project is to see how accounting principles development based on our local
problems instead of reinventing the present principles with its shortcomings.
Again, the study would take a
meticutons look at the trend of standards development and revision of the world
over, and seek ideal devices of providing good standards of measure and
reporting that would remove distrust and attract more acceptance from the
public we serve.
Finally, the urgent need to hormonize
and standardize the skills and knowledge acquired by Nigerians who studied in
the two contrasting economies of competitive market of the west or the planned
economy for the East would be tackled.
This is done to achieve uniformity in the treatment and reporting of
accounting information. Among others, it hopes to introduce measures which will
enhance the reliability and validity of information reporting in the financial
statement.
1.3 OBJECTIVES OF THE STUDY
David Allem, (1989:35-48)
made it clear that given the rapid globalization of business in recent years,
it seems reasonable to predict that an effective system of accounting for
danging price levels and other economic uncertainties must address the present
economic situation. Taking that as on
premise, this study hopes to change those practical detents which are traceable
to the difficulties of narrowing areas of difference in practices. The aim is to ensure that financial
statements that are presented to both local and foreign users are structurally
uniform and meaningful.
Secondly, it hopes to
hance accounting standards and hence accounting information that reflects our
economic environment but at the same time, satisfies the anticipated needs of
the users of the information. Among
others, it hopes to introduce measures which will enhance the reliability and
validity of information reported in the financial statements.
1.4 HYPOTHESIS OF THE RESEARCH
In order to guide the
researcher in planning the course of this in quality in choosing the necessary
data in deciding the appropriate statistical treatment and in examining the
outcome of this study, the following hypothesis were formulated:
1.
Hi: There is need for review of the accounting
principles and standards to reflect contemporary problems.
2.
Hi: Lack
of trust in the professional competence of promulgation of the companies and
allied matters Decree.
3.
HI: Thirteen accounting standards launched by the Nigeria
accounting standard Board were mere carbon copies of those produce elsewhere?
1.5 SIGNIFICANCE OF THE STUDY
The word ‘Empiricalâ€
attached to this study “The development of accounting principles and standard
was defined in the 20th centrury chamber dictionary as the system
which reflecting all knowledge, vest solely on experience and induction “(Kink
Patrick 1943: 409). Taking this as
premise, the meaning or importance of this project lies on the light quality
thoughts of protocohe members of the profession relating to the use of present
day accounting principles and standards.
As we have rightly been
informed, some failure in the current standards all over the world have
compelled members of the profession, to seek ways of correcting them. In the process, they discovered that lack of
clear statement of the aims and purposes of financial statement is because
economic life differs from other country to country. This in turn has led to disparities in the
standards and quality of practice between accountants. This letter has a strong effect on the
profession because it has resulted to doubt from the public which we server, as
to how competent we are. Therefore, this
study has its importance, very strong quest to be satisfied, and it goes thus:
in the face of above divergent conditions and situations, is THERE NO MEANS WE
CAN EVOLVE STANDARD FASHIONED FOR THE CONTEMPORARY PERIOD AND ALSO FOR A
SPECIFIC ECONOMIC LIFE?
1.6 LIMITATION OF THE STUDY
The sample size is
restricted to Nigeria
only even though the study went beyond the national boarders. The reason advanced for a professed as a
guide to action, especially one consciously recognized and followed; and
standards as a definite level of excellence attainment, whether or the like or
a definite degrees of any equality viewed as a prescribed object.
1.7 DEFINITION OF TERMS
The main thrust of this
chapter is to look closely at what different authorities are saying on the
topic view.
According to Okpechi (1990:3)
accounting is the application of standards of procedures transactions and
procedures and methods in order to reflect the impact of transactions and
conditions on the financial position of an enterpriseâ€.
On standard, we described it as
reference points to which other measures are expected to confirm†(Okpechi, 1990:2).
Garbutt Douglas 91984:0101) sees
accounting as a discipline concerned with the recording, analysis and
forecasting of income and wealth of business and other entities. He went further to define accounting
principles as the rale and conventions which have been adopted as a general
guide action by the accountancy profession.
“On accounting standards he regards it as methods of accounting approved
by the authoritative bodies in whose departure the financial effect should be
disclosed and explained’.
Besides, Lawrence Isung (1990:14) and
Nwoko Chinedu (1990:1-3) have similar definitions as one above, but went beyond
to distinguish between concepts and principles as contain in the statement of
accounting standards.
Referring to the statement, Isung work
about Accounting concept saying “concepts qualified as fundamental and are the
underpinning of the preparation and presentation of financial statement and
principles as the rule that accountants must follow when it becomes necessary
to exercise judgment about the choice and the application of conflicting
fundamental concept. The forgoing seems to be saying that accounting principles
and standards are off-shoos or conventions deprived from experience of years
ago
A background knowledge of those past
experiences in the accounting profession becomes apparent, if one must judge
contemporary issue correctly.
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