This study, A CRITICAL ANALYSIS OF THE USE OF FINANCIAL REPORT IN ASSESSING BANK PERFORMANCE (A CASE STUDY UNION BANK OF NIGERIA PLC) contains concise information that will serve as a framework or guide for your project work. The project study is well-researched for academic purposes and are usually provided in complete chapters with adequate References.
The purpose of this study was to examine banks, on investments and performance appraisal. It was also to ascertain the problems of using financial reports to access performance of banks and finally to determine 17 there’s a relationship between financial reporting and performance evaluation of a bank.
The inductive research method was adopted and the statistical analysts, particularly the chi-square and t-distribution test were used in the analysis of the data collected from the bank.
The findings of the study were that:
The following conclusions ere made:
Although investors and performance evaluation analyst relied on financial statement in their decisions and appraisal, the reliability of financial report especially during inflation cannot be assured owing to the historical cost convention used as a basis for asset valuation by banks. This is because; the profits of an accounting year would not usually show a true figure owing to the courage effect of inflation. Therefore, managerial decision of banks based entirely on financial reports will lend to poor and inadequate decisions.
The recommendations and suggesting made were base wholly on the out come of the study, for example, on the problem inflation, it was recommended that the bank should adopt the current cost accounting basis for its financial reporting ensure credibility and reliability of information, by the various users, given the inflationary relatives.
TABLE OF CONTENT
CHAPTER ONE INTRODUCTION
STATEMENT OF THE PROBLEM
OBJECTIVE OF THE STUDY
SIGNIFICANCE OF THE STUDY
SCOPE AND LIMITATION OF THE STUDY
DEFINITION OF TERMS
REVIEW OF RELATED LITERATURE
HISTORICAL BACKGROUND OF UNION BANK OF NIGERIA PLC
THE NEED FOR FINANCIAL REPORTS
THE COMPOSITION OF THE FINANCIAL REPORTS
THE CHIAIRMANS REPORTS
THE DIRECTORS REPROT
THE AUDITORS REPORT
THE FINANCIAL STATEMENT
VARIOUS USERS OF FINANCIAL REPORTS AND THEIR INFORMATION NEEDS
TAX AUTHORITIES AND GOVERNMENT
EMPLOYEES AND TRADE UNIONS
FINANCIAL REPORTING BY BANKS
THE PRUDENTIAL GUIDELINES
PERFORMANCE EVALUATION IN THE BANKING INDUSTRY
EFFICIENCY AND PROFITABILITY
POTENTIAL AND ACTUAL GROWTH
LOANS AND ADVANCES
RESEARCH DESIGN AND METHODOLOGY
SOURCES OF DATA
POPULATION OF THE STUDY
METHOD OF DATA PRESENTATION
METHODS OF DATA ANALYSIS
DATA PRESENTATION AND ANALYSIS DATA ANALYSIS TECHNIGUES
TEST OF HYPOTHESIS
FINDINGS, RECOMMENDATIONS ANS CONCLUSIONS FINDINGS
1.1 BACKGROUND OF STUDY
A farmer, who plants corps, expects result, similarly to student who sits for examination expects results. The same 5 also true of an investor.
For the farmer, the result might be communicated to him in the form of a bumper harvest. It result sheet or a report card would usually sufficed for a student. However, in the of an investor, the result is communicated through the financial reports.
Financial reports are law to be prepared by every limited liability company; these limited liability companies abound in virtually all sector of the economy.
Every company shall cause accounting records to be kept. The accounting records shall be sufficient to show and explain the transactions of the company and shall be such as to disclose with reasonable accuracy, at anytime the financial position of the company.
In the banking industry, financial reports are of great interest to the general public because the banks directly or indirectly interact with people.
This public interest has caused companies (including banks) to accept social as well as economic, financial and legal responsibilities and has created a consequence, a growing need for the communication of information to account for the results which are of considerable interest a wide range of individuals and organizations.
So, it becomes very imperative for reliable information to be circulated to interested parties which can enable them to acquire an essential knowledge of the way is which companies particularly the bank are performing in relation to the public interest. This fact is further educated by the recommendation of the working party set up in Britain by the Accounting standard committee in October 1974 under the chairmanship of Derek booth man which took a study of the scope and aims of publisher financial statements.
The committee recommended that:
“The fundamental objectives of corporate report are to communicate economic measurement of the reporting entity useful to those having reasonable right to such information”
It is not an over statement when one says that the banking industry is the flume on which the national economy rotates. This mammoth, impact upon a country economy therefore makes it a public affair is everybody in the country has a right to know what such organizations are doing, more so all information, necessary to explain the organization’s activities fully should be provided in the annual reports.
One of the most significant aspects of the information system of business enterprises in an economy is that which deals with the communicate of financial data, especially in describing business profitability and financial position. This information is important because it attempts to partial the economic resources of the enterprises and the financial results, which have been achieved by its management when those resources have been put to use. It attempts to reveal how effective management has been in resources utilization as well as the financial reward available to compensate for risk taken by various suppliers of capital.
1.2 STATEMENT OF THE PROBLEM
The genuineness or other wise of financial reports has attracted diverse opinions from different quarters, such opinions can come from the general public, tax authorities, shareholders, creditors with long or short term interest, financial analyst and potential investors.
They argue that the financial reports do not usually give an accurate data about the actionties of such business concerns, for example, the idea of stating assets at their historical cost do not favour most investors as they argue that inflation is not usually taken care of, though the real value of such assets might have been eroded.
Again since the financial reports prepared by managements, the shareholders and others argue that there would usually be some elements of bi as on the part of management in the disclosure of management’s financial ineptitude.
But in any case the management claims that some inherent problems would usually affect the accuracy of such reports. It is therefore the intention of this researcher to delve into the matter to enable him establish a relationship between financial reporting and performance evaluate in a bank.
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