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PROJECT TOPIC- Evaluation of Financial Reporting of Selected Petroleum Marketing Companies Faculty

Evaluation of Financial Reporting of Selected
Petroleum Marketing Companies Faculty

ABSTRACT

Financial report also known as the published corporate report could be seen as the prime formal methods by which
companies communicate with their shareholders and other various user groups. Companies are compelled by law to prepare their financial reports according to the provisions of the minimum disclosure requirement as has been laid down by the Companies and Allied Matters Act, 1990. However, inspite of the laid down promulgation (CAMA
1990), many companies have failed to supply sufficient and adequate accounting information in their published financial reports and this has led to poor performance and in some cases liquidation of many organizations. Moreover, many investors and various user groups have been misled by the insufficient and inadequate financial information in the investment decisions.
In view of the above, this work focused on the financial reporting under the Companies and Allied Matters Act of 1990 with a view of ascertaining whether companies have complied with the disclosure provisions of the CAMA, 1990 with regards to the contents of their financial statements. A case study of two vii petroleum marketing companies (Mobile oil Nigeria PIC . . and Texaco Nigeria Plc) both with area officer in Enugu was carried out as to ascertain whether these companies have complied with and adhered to the disclosure requirement of CAMA, 1990. Four research questions and two hypotheses were ‘ formulated.

Data collection was made through the use of questionnaire, oral interviews and review of various books of. ‘ accounts and records. Percentages, tables, bar charts, histogram, …. . . pie chart and chi-square were used for analysis. Major Findings The following major findings were made: That .the companies studied have complied with and adhered
strictly to the previous of the minimum disclosure requirement as have been laid down by CAMA, I990 and have performed well in terms of their investments. Again, that the companies under review have provided investors and various groups with sufficient and adequate financial information in their corporate reports.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The financial report also called the published annual corporate report is the prime formal method by which companies communicate with their shareholders and other interested user groups. Over the years its basic format has changed; influenced by the demands of successive companies Acts and societal pressures. The final accounts of companies are basic financial reports (statements) that are expected to be produced annually by profit seeking enterprises for the use of bankers, shareholders, potential investors, creditors, management and other decision markers.

The financial report is usually made up of: –

The Statement of accounting policies.
The balance sheet as at last day of the year.
A profit and loss account; in the case of company not trading for profits.
An income and expenditure account for the year.
Notes on the accounts.
The Auditors’ report.
Directors’ report.
A statement of sot and application of fund.
A value added statement for the year
A five-year financial summary and in the case of holding company . .
(the group financial statements). . .
It could be seen that financial report is a comprehensive package of information of all kind, which must completely describe an organization’s economic activities. In the words of Meig and Meig (1981), financial statements
are the instrument panel of business. They constitute a report on managerial performance, attesting to management success or failure and flashing warming signals of impending difficulties.

The  – views of Meig and Meig suggest that financial statements are essential for their information contents.
The Companies and Allied Matters Act, 1990 (CAMA) sets out minimum disclosure requirements and accounting records and books of accounts to be maintained. Also, the International ‘ ‘Accounting Standards (IAS), talks about information to be disclosed in financial statement and the Statement of Accounting Standard (SAS) 2 also states the information to be disclosed in financial statements of enterprises.

Such information required to be disclosed relate to the content of the Profit and Loss Account, the Balance Sheet and the Statement of source and Application of Funds. The regulatory framework covers the format in which the Profit and Loss Account and the Balance Sheet should presented.This study titled Evaluation of Financial Report of Petroleum
Marketing Companies under the Companies and Allied Act of I990 aims at ascertaining the procedure followed by the two petroleum marketing companies (Mobil Oil Nigeria PIC and Texaco Nigeria Plc) in producing financial statements and assessing compliance of their statements with the requirements of the CAMA and the adequacy or otherwise of their financial statements

Evaluation of Financial Reporting of Selected
Petroleum Marketing Companies Faculty

 

1.2 STATEMENT OF PROBLEM

Some groups of users of accounting information believe that the insufficiency of information in the financial statements of most
companies pose a lot of problems to them in making investment decision. Moreover, some shareholders find it difficult to justify tt-w
dividend they receive. Another problem is that some users of ,corporate report complain of incomprehensibility of financial statements because of the technicality of the language used.

Furthermore, most investors complain that the profit forecast should be included in the annual corporate report so as to enable them to have a better idea of the expected future profit of the company. Based on these enumerated problems, this researcher sets …. . out to review the financial statements of some selected petroleum marketing companies (Mosil Oil and Texaco Nig PIC) in order to ascertain the extent to which the problems are manifested in their corporate report.

1.3 OBJECTIVES OF THE STUDY

The objectives of the study include:
1. Examine the broad requirements of CAMA, 1990 in terms of corporate financial reporting….. .
2. Appraise compliance with the requirements by the selected .. .companies.
3. Assess the sufficiency of the information disclosed in the accounts in relation to the need of the users.
4. Drawing conclusion and making recommendations – where necessary. . .

1.4 SIGNIFICANCE OF THE STUDY

The findings of the study will help the management of the companies studied in appraising the adequacy or otherwise’ of their financial reporting disclosures. By appraising the adequacy of their financial reporting disclosure will now assist the management of the companies studied to have accurate accounting information that will assist them in controlling their business, safeguarding their assets, preparing financial statements and complying with the stated legislation. It will also serve as a secondary source of information for existing and
prospective investors as well as secondary source of data for other researchers.

Financial reporting will continue to adapt to a changing environment and fulfill a wider role than it has been. In this respect it is almost certain that the extent of disclosure ‘will increase in future and companies which recognize the benefits of successfully communicating with the public view this as part of their long-term corporate strategy. Answer to questions on financial reports which bother on readability, interest values, understandability, legal responsibility and legally required sections shall be of benefit to the general public as a piece of interesting reference material

 

Evaluation of Financial Reporting of Selected
Petroleum Marketing Companies Faculty

 

 

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