Impact of Financial Statements on the Performance of Food and Beverages: A Case Study of Nigeria Breweries Plc
Chapter One
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To ascertain the impact of financial statement on Nigeria breweries plc
- To ascertain the relationship between financial statement and organizational performance
- To ascertain the impact of financial statement on fraudulent act of the company
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
Fraud in financial reporting has been explained differently by researchers and practitioners. Elliott and Willingham (1980) see financial reporting fraud as executive deceit: “The deliberate fraud committed by management those injury investors and creditors through materially misleading financial statements.” Apart from those who commit their money into the firm, also those the firm owes, them that examine the financial records are also affected by the fraud. They could be affected by losing money, position, integrity etc, (Rezaee, 2005). Deception in financial reporting appears in various means which includes over reporting income by acknowledging unearned revenue, increasing the value of asset, and improper expense recognition (Arthur 2014). Financial report scam like increase in income that does not go along with cash and sudden consistent growth in sales will automatically indicate a “red flag.” Everette (2012) defined red flag as a warning sign in the financial statement which should be notice or dealt with. Financial statement fraud is the deliberate fraud committed by management that injures investor and creditors with materially misleading financial statement (Kerwin 1995) cited in (Khahn 2009). Misstatement or accounting irregularities in financial statement can arise from error or fraud (Kwok 2005). It is therefore important to differentiate between financial statement error and financial statement fraud. Financial statement error refers to unintentional misstatement in financial statement, including the omission of an amount or a disclosure. The financial report is the basic instrument in assessing the general activity of the firm and usually adopted as a means of getting early warning sign concerning the poor performance of the firm, (Mensah, 1984; Gentry, Newbold and Whitford 1985; Beaver, 1996; Wu and Jung-Zhi 2004). Nevertheless, the reoccurrence of financial fraud involving firms from the manufacturing industry is an indication that traditional financial distress warning system has not been effective as an early detecting tool. This have led to many researchers advocating for the use of indicators to check fraud and risks associated with the manufacturing industry, (Dechow et al., 1996; Beasley, 1996; Ward and Foster 1997; Abbott et al., 2000). Hence, this research adopted the theory of monetary distress alert and firms’ debt obligations inefficiency to develop fraud models for the manufacturing sector. Nevertheless, the reoccurrence of financial fraud involving firms from the manufacturing industry is an indication that traditional financial distress warning system has not been effective as an early detecting tool. This have led to many researchers advocating for the use of indicators to check fraud and risks associated with the manufacturing industry, (Dechow et al., 1996; Beasley, 1996; Ward and Foster and Ward 1997; Abbott et al., 2000). Hence, this research adopted the theory of monetary distress alert and firms’ debt obligations inefficiency to develop fraud models for the manufacturing sector. Previous research concentrated on Beaver (1966) and Altman (1968) which introduced single and multiple discriminant analysis to evaluate whether monetary conditions are healthy. Other researches also centered on the predictability of some models like logistic model and reversed propagation neural network, (Martin, 1977; Ohlson, 1980; Zmijewski, 1984; Zavgren, 1985; Coats and Fant, 1993). The single model for analysis of variable may not be used to determine multifaceted variations. In the same way, representations developed by MDA may not be a good assessment tool for threat incidence. Fraud detection in the manufacturing industry depends heavily on the application and development of early warning sign models that has the capacity of revealing the possibility of a fraud which may not be easily seen in the financial statement. Previous research had recommended the prediction ability of neural network which is practically preferred to common statistical approaches (Malhotra et al., 1999; Salchenberger et al., 1992; Chen and Huang, 2003; Baesens et al., 2005; Wang, 2009). This research adopted monetary indicators, public governance and fund flow variables to develop models on financial data fraud checks; with the application of logistic estimation.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to impact of financial statement on the performance of food and beverages ( a case study of Nigeria breweries Plc)
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information on impact of financial statement on the performance of food and beverages (a case study of Nigeria breweries Plc). 200 staff of Nigeria breweries Plc in Lagos state was selected randomly by the researcher as the population of the study.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain impact of financial statement on the performance of food and beverages (a case study of Nigeria Plc)
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of financial statement on the performance of food and beverages
Summary
This study was on impact of financial statement on the performance of food and beverages. Three objectives were raised which included: To ascertain the impact of financial statement on Nigeria breweries plc, to ascertain the relationship between financial statement and organizational performance, to ascertain the impact of financial statement on fraudulent act of the company. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of Nigeria breweries Plc, Lagos state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up production managers, brewers, HRMs and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
The specific objective which the study sought to achieve has indeed yielded the overall result which provides evidence to show the impact of financial statement fraud on profitability of Nigerian manufacturing industry. The return on asset (ROA) has been linked by findings of this study to be having an impact based on the explanatory variables. Effective and adequate management of the explanatory variables will have a great result on the profitability of firm. Consequently, if the Nigerian manufacturing industry is to be made more effective and developed, financial statement fraud have to be managed effectively and developed best means of covering all loopholes of it or by complete jettison of the practice. However, this must be done by professional in the field of accounting so that adequate advice can be given to the top management level for decision making. To this end financial statement fraud need to be focused on and treated as necessary innovation in manufacturing sector in order to encourage fiscal growth
Recommendation
- The financial statement fraud should be paramount in the effective running of manufacturing industry in Nigeria. Since effects of the explanatory variables have effective effects in reducing the return on asset either in short run or long run.
- Threat or total reduction or breakdown in market sales due to improper organization of financial statement scam including other cases concerning creditors of the firm brings about the firm’s failure
- It should be mandatory for all manufacturing industry to apply correct financial rules and operations in the preparation of monetary statement.
- Accounting professional bodies and appropriate regulators should ensure proper financial statement fraud management system within the organization as internal control
References
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