CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

The bookkeeping techniques used in accounting include maintaining a financial record of

corporate transactions and creating statements on the company's assets, liabilities, and operating

performance. Per Houghton (2009). The recording, categorization, and interpretation of financial

data pertaining to a specific entity or individual constitute accounting. Since Aspinall (1970).

Accounting (investorguide.com) is the methodical documentation, reporting, and analysis of a

company's financial activities. The following are one or more of the objects in accounting:

- The maintenance of a record of transactions classifying to show gains or losses resulting from

various activities.

- The maintenance of classified records of the cash, debtors, etc and of changes in them.

- The periodic preparation of statements summarizing the economic results of the activities and

financial position.

- The use of such statements by the management of an undertaking to assist them in assessing the

efficiency of the management and by in determining policy with regards to further investment

and the withdrawal of profit, and by the government in determining tax liability.

Any business owner wants to manage their company as efficiently as possible. Accounting

records are kept in order to accomplish this. These accounting records enable the business's

owner to compare the amounts of each cost and expense. It also serves as a resource for making

commercial and financial decisions.

Accountants are in charge of preparing financial accounting data. Some of these accountants

practice their profession as employers in the commercial, industrial, and public sectors.

Accountants' financial accounting information is quantitative in nature since it is normally

expressed in monetary terms, however non-monetary information is also frequently included in

accounting reports.

The methods or procedures for preparing financial accounting information are based on definite

principles which are usually rules and conventions which have been adopted by accountancy

profession as a general guide to action.

Because these principles are written in such a way, the practical nuances of accounting may

differ from one organization to the next. However, in order to gain acceptability, such accounting

principles must be beneficial in dealing with real recording problems, reasonably objective (i.e.,

offer a similar result in the hands of trained practitioners), and viable (i.e., not expensive to

apply). These are referred to as generally accepted accounting principles (GAAP).

1.2 Statement of the Problem

Most corporations have a sound accounting system that helps them not only make decisions but

also manage operating expenses. Because they may be managing the business instinctively, the

rules governing the information content of the financial statement are highly ambiguous of the

type of organization, they always have accounting information regarding the value, normally in

monetary terms, of the resources used in generating the required product and services on the one

hand, and a fairly accurate measurement of income or profit or value of benefits earned from the

disposal of their products and services on the other.

The study delves into the nature and roles of financial accounting information, as well as

management needs for accounting information, which can be said to revolve around the purpose
of planning and controlling an organization's affairs, making policy decisions, and making

choices among a number of alternative options in the face of unexpected circumstances.

This work will serve as a guide to others who may intend to undertake a review of the work or

other related topics in the future.

1.3 Objectives of the Study

The main objective of this study is to examine the reliance of First bank plc Enugu branch on

financial accounting information for effective business and financial decisions. The specific

objectives of the study are:

i. To assess the impact of financial accounting information on the operational efficiency

and financial performance of First Bank Plc's Enugu branch.

ii. To identify and analyze those factors that hinder the effective use of financial accounting

information within the Enugu branch of First Bank Plc.

iii. To investigate the relationship between the availability and quality of financial

accounting information and the decision-making processes in the bank.

1.4 Research Questions

The study seeks to provide answers to the following pertinent research questions:

i. What is the impact of financial accounting information in First Bank Plc Enugu branch?

ii. What factors hinders the effective use of financial accounting information?

iii. What is the relationship between financial accounting information and the decision made

in the bank?
1.5 Research Hypothesis

With respect to the nature and extent of problem outlined for this study, it was considered

appropriate to have sound bases for a research of this nature. They are:

H0: The information content of the annual financial statements of First Bank PLC Enugu is not

highly reliable.

H1: The information content of First Bank PLC Enugu is highly reliable.

H0: Adequate financial accounting information does not hinder effective decision making in the

bank.

H2: Adequate financial accounting information hinders effective decision made in the bank.

1.6 Significance of the Study

The study on the reliance on financial accounting information for effective business and financial

decisions in corporate organizations, with a case study of First Bank Plc Enugu branch, holds

considerable significance at multiple levels:

i. Contribution to Academic Knowledge: This research contributes to the existing body of

academic knowledge in the fields of accounting, finance, and business management. By

investigating the role of financial accounting information in a real world banking context, the

study provides valuable insights and empirical evidence that can enrich the academic literature

and serve as a reference for future research.

ii. Policy Formulation and Industry Best Practices: The research outcomes may serve as a

foundation for the formulation of policies and best practices in the Nigerian banking industry.
Regulatory authorities and industry stakeholders can utilize this information to develop

guidelines and standards that encourage the appropriate use of financial accounting information

for enhancing transparency, risk management, and stability within the sector.

iii. Business Decision Making in Corporate Organizations: This study's insights can extend

beyond the banking sector and have broader implications for decision making in various

corporate organizations. The research findings can be adapted by other businesses to better

understand the role of financial accounting information in achieving strategic objectives and

improving financial health.

iv. Stakeholder and Investor Awareness: The study also serves to enhance the awareness of

stakeholders and investors regarding the significance of financial accounting information in

evaluating the performance and stability of financial institutions. This can empower

shareholders, potential investors, and the public with valuable knowledge for making informed

decisions related to investments and financial transactions.

In summary, the significance of this study lies in its potential to enhance the understanding of

financial accounting information's impact, identify hurdles to its effective use, and shed light on

its role in decision-making within First Bank Plc, Enugu branch, and the broader corporate

landscape. The study's findings can lead to practical improvements in financial reporting,

management practices, and regulatory frameworks, ultimately benefiting both corporate

organizations and their stakeholders.

1.7 Scope of the Study

This research focuses on the Enugu branch of First Bank Plc in Nigeria, examining the use of

financial accounting information for business and financial decision making within this specific
branch. The study is limited to the Enugu branch of First Bank Plc and covers historical data up

to 2023, primarily emphasizing the preceding years. Key subjects include the branch's

employees, management, and stakeholders, providing insights into the impact of financial

accounting information on decision-making. The primary focus is on financial accounting

information.

1.8 Limitations of the Study

A study of this magnitude cannot be without certain limitations and they include;

i. Accounting information is very vast; it covers various branches of accounting such as

cost accounting, public sector accounting, management accounting, etc. Consequently, the study

is limited.

ii. Time Constraint: The times to write, compile, produce and submit this work were not

enough. This is a result of compacted academic and non-academic programmes.

iii. Financial Constraint: Another limitation to this work is fund. In respect to the increment

of fuel, the cost of printing has concurrently increased. There is also a high cost of getting

sufficient data for this work.

1.9 Operational Definition of Terms

The following relevant operational terms are briefly defined with the aim of providing better

understanding:

Accounting: The provision of relevant economic information to permit informed judgment and

decisions by users of information.

Accountant: Someone whose profession is to keep and examine business accounts. Accounting

Concepts and Principles: These are general guide to action adopted by the accountancy

profession.

Generally Accepted Accounting Principles (GAAP): They are accounting principles that have

been developed largely in accounting practice or have been established by an authoritative

organization.

Financial Accounting Information: These are information obtained as a result of systematic

gathering, identifying, summarizing, and reporting business transactions in monetary terms.

 REFERENCE

Adeniyi A.A. (2008), An insight into: Management Accounting (4th Edition), Lagos, ROT

publishers.

Ama G.A.N. (2000), Modern Financial Accounting theory and practice, Port Harcourt,

Educational Books and investment Ltd.

Anthony R.N. and Reece D.S. (1975), Management Accounting Principles, Homewood, Richard

D. Lowin Inc.

Eboh E.C. (2009), Social and Economic Research Principles and Methods, Enugu, African

Institute for Applied Economics.

First Bank of Nigeria Plc (2010), Annual Report and Accounts.

Igben R.O. (2007), Financial Accounting made simple (Vol. 1 2nd Edition), Lagos, ROT

publishers.

Ihendinihu J.0 (2008) Fundamentals of Financial Accounting (Vol.1) Enugu, Ephraimites

publishers.

Ihendinihu J.0 (2009) Intermediate financial accounting, Lagos, Cute edge publications

InvestorGuide.com

Miffhn H. (2009), the American Heritage Dictionary, America, Heritage Publishers.

Miller A.A. (1970), Chambers Encyclopedia, London, Learning System Corporation Limited.
Nwadighoha C.E (2008) Accounting theory and practice, Enugu, Ephramites printing and

publishing.

Nwadighoha C.E (2010), cost and management accounting, Enugu, Ephraimites publishers.
 CHAPTER TWO

REVIEW OF RELATED LITERATURE

2.1 Conceptual Framework

Accounting information is divided into two categories: financial accounting, sometimes known

as public information, and managerial accounting, also known as private information. Financial

accounting includes information disseminated to parties other than the enterprise--stockholders,

creditors, customers, suppliers, regulatory commissioners, financial analysts, and trade

associations--as well as information of interest to the company's officers and managers. This

information refers to an enterprise's financial status, liquidity (ability to convert to cash), and

profitability. (Rose:2002) managerial accounting is concerned with cost-profit-volume linkages,

efficiency and productivity, planning control, incentive decisions, capital budgeting, and other

related issues. This information is not generally disseminated outside the company. Whereas the

general-purpose financial statements of financial accounting are as assemble to meet basic

information needs of most external users, managerial accounting provides a wide variety of

specialized report for division managers, department heads project directors, section supervisors,

and other managers. (Rose: 2004).

Accounting data should contain factors such as flexibility and a company's capacity to

adapt to change. Because the accounting standards were created during stable periods, the

context of flexibility does not present in any of them. The atmosphere has altered, and

uncertainty has intensified. Given that flexibility is one of the results of uncertainty, greater

value will be given to flexibility in an organization's uncertain position (Puxty 1993).

2.1.1 Historical Review

First Bank Plc, one of Nigeria's oldest and most prestigious financial organizations, was formed

in 1894 in Lagos as the Bank of British West Africa (BBWA). During the colonial era, the bank,

which was later renamed Standard Bank of West Africa, was critical to Nigeria's economic

development. Following Nigeria's independence, the bank was locally incorporated as Standard

Bank of Nigeria Limited in 1969, and then became First Bank of Nigeria Limited in 1979. It was

eventually renamed First Bank of Nigeria Plc, and it became a public limited corporation. Over

the years, First Bank Plc has expanded its footprint both domestically and internationally,

becoming a key player in the Nigerian and West African banking sector (First Bank Plc, Annual

Report, 2021).

The evolution of financial accounting processes at First Bank Plc reflects the changing landscape

of accounting standards and regulatory obligations in Nigeria. As part of its commitment to

transparency and worldwide best practices, First Bank Plc has implemented different accounting

standards over the years, including the shift to worldwide Financial Reporting Standards (IFRS).

The implementation of IFRS aligns the bank's financial reporting with worldwide standards,

improving comparability and transparency in financial statements. This change in accounting

rules has had a significant impact on financial reporting processes, altering how the bank

prepares and presents its financial statements. This progression can be seen in First Bank Plc's

annual reports from 2020 to 2023. Throughout its history, First Bank Plc has faced significant

events and challenges that have influenced its financial accounting practices and the reliance on

financial accounting information. These challenges include economic fluctuations, regulatory

changes, market dynamics, and specific events affecting the banking industry in Nigeria. For
example, the 2008 global financial crisis has ramifications for financial institutions all across the

world, necessitating reforms in accounting standards and risk management. Furthermore,

changes in capital adequacy standards and local economic situations have influenced how First

Bank Plc accounts for risk and manages its financial information.

Understanding the historical backdrop and responses to these events and issues is critical for

assessing the role of financial accounting information in First Bank Plc decision-making. The

historical review can help you understand how the bank has changed its accounting processes

over time and how it has dealt with the difficulties and opportunities that have arisen.

2.1.2 The Concept of Accounting Information System

Accounting information is a report or pertinent financial information about an organization's or

unit's economic activity that is provided to users (Reger and Herman 1983). Accounting

knowledge dates back to 4500 B.C., when stewardship accounting information allowed them to

arrange their stock and riches. Keeping records of earnings and taxes due to barter trading from

the early nineteenth century when the Greeks and Romans created a better and systematic book

keeping technique to the present day when machines are utilized in the accounting process.

Accounting has improved significantly in recent years as a result of increased demand for

information in planning and decision-making as a result of changing environments. Information

made of what is accepted as accounting today would not have been recognized as such 50 years

ago changing social attitudes combined with development in information technology,

quantitative methods and behavioral sciences has affected radically the environment in which

accounting operates today.

Accounting is moving away from the procedure base encompassing record keeping and such

related work as the preparation of a budget and final accounts towards the adoption of a role

which emphasizes social importance Gautier and under down (1982). Accounting information

includes financial position statements and other reports provided by the accountant that

demonstrate the genuine and fair financial condition of the organization's economic activity. The

balance sheet, profit and loss account, and cash flow statements are all examples of accounting

information. According to Gautier and Underdown (1982), a balance sheet is a statement of

financial status that lists the accounting period and offers a measure of the capital spent by the

owners in the firm or business. It is also divided into four major sections: fixed assets, current

assets, capital, and liabilities. This classification facilitates business financial analysis.

Trading profit and loss account shows the profitability of the business, it also shows the amount

of economic activities that took place during the preceding accounting period and profit

derivable form such economic activities. It shows the gross profit as well as the net profit of the

organization within the accounting period. Gross profit is the sum of sales less the cost of goods

sold.

Cash flow statement is a statement that shows the cash movement in transaction engaged in by

the firm for a particular period usually one year. the cash flow statement was introduced to

replace the fund flow statement in (1998) to make it easier for users of financial statement to

relate cash availability and profit over a given period. We have two methods of calculating the

cash flow in a firm, they are:

a) Direct method

b) Indirect method
The balance sheet, profit and loss account and cash flow statement together constitutes the

financial statement of an organization.

2.1.3 Uses of Accounting Information

 The information provided by accounting helps the manager to do things. Robert and

Frank (1980) point out that the information reveals how closely the company’s objective

is being met (score keeping).

 The information directs attention i.e. it answers questions about the operations or

individuals that need attention in order to bring the organization closer to its objectives.

 The information helps in solving problems i.e. it answers the questions about the best to

perform a specific task of the best solution to a given problem, Garrison (1979) confirms

the first by saying that management uses the information to plan effectively and focus

attention on deviation from plans. It is also used to direct day –to-day operation and to

arrive at the best solution to the operating problems faced by the organizations.

2.1.4 The Users of Accounting Information

Accounting information serves as a base for planning and decision making. It provides the

various users the necessary data assistance in this direction. These users according to needed et al

(1984) could be categorized

a. Management

b. Users with direct financial interest

c. Users with indirect financial interest

Management

One cannot conceive any organization that does not have any objective. The primary objective

for any business organization is profit making Hussey, (1978) this responsibility rests solely on
the management. Although other environmental factors may modify the degree of profit sought,

it must be realized that adequate profit is necessary for the survival and the growth of the

business. To achieve the objectives, management must be able to plan, control and coordinate all

the activities of the organization.

Users with Direct Financial Interest

These classes of information users include

a. Investors (share holders) and potential share holders, creditors and potential creditors and

employees of the organization.

b. Investors and potential investors

Share Holders and Potential Share Holders

These are primarily interest in the financial information and management serves as trusts of the

investment of share holders hare therefore found it necessary to know the performance of the

business in which they have invested. They therefore make use of accounting information like

annual reports and other financial statements.

Creditors and Potential Creditors

Creditors include debenture holder’s interest and money-lenders who expect returns information

of interest on the debentures or principal creditors and potential creditors alike have direct

financial interest in the firm.

A critical study of the firm’s annual report reveals the viability of the firm and the ability of the

pay the creditors. Banks finance companies, mortgage companies, security firms, insurance firms

and other who land money needles (1984) creditors therefore make use of accounting

information.
Employees

Labour unions and employees study financial statement of companies as part of their duty to

practice for important labor negotiations.

Based on the information received though the financial statements, they are able to negotiate for

higher pay bonus, other rings benefits and other better working conditions. The use of accounting

information is therefore important to employee.

Users with Indirect Financial Interest

Changing environment factors have made the society large users of accounting information it is

common knowledge that the government through her agents and the general public make use of

accounting information in their day -to- day activities. These agents include tax authorities,

regulatory agencies, economic planners and other groups.

Tax Authorities

Tax revenue is one of the major sources of finance of the government. This has prompted the

establishment of internal revenue sections in all levels of government to deal with matters

relating to the assessment and collection taxes. Taxes such as PAYE, value added tax, (VAT)

and excise tax are collected.

Regulation Agencies

These are government agencies set up for the purpose of regulating public corporations and

companies. These agencies make use of accounting information to determine the rate at which

shares should be used.

Economic Planners

Government will have to take active part in planning and forecasting information. Economic

planners use accounting information to determine total production inventories, income, dividend,
taxes and other economic statistics. This class of users information is the general publicity. They

are mainly consumers who have the interest in the financial statement of the firms for the

purpose of ascertaining to success of the firm, in their surroundings.

2.1.5 The Nature Of Information For Organization Effectiveness

In today's modern world, man has become increasingly reliant on various forms of organizations

to meet his wants. The effectiveness of the organization determines the satisfaction of needs. The

more the effectiveness, the greater the satisfaction of human and organizational needs. Ray

(1994) asserts that information is a critical component of organizational effectiveness.

Information has attracted widespread attention as a crucial tool for organizational efficiency

because it provides a great focus point for theoretical integration of the expanding and highly

diverse area of organizational theory.

Organization effectiveness is the extent to which an organization achieves its goals with the

given resources and means. This organizational effectiveness reflects how well the organization

is equipped to;

a. Survive in the modern competitive business world by successful coping and

b. Grow and develop in future through creative adaptation strategies.

For this to be achieved efficient and effective information must be maintained. The study of

organizational effectiveness has long been the province of those in the management science. In

recent years however, workplace consultant and strategies have become increasingly interested

in designing physical environments that promote organizational success.

Although there are many ways to measure organizational success, a number of factors

consistently show up in effectiveness metrics according to Morgan (1986) these include the

following:
a) Achieving organizational mission

b) Product/service quality and value

c) Customer satisfaction

d) Capacity for innovation

e) Adaption to organization and communication

f) Employee attraction and relation

g) Effective group and individual work

h) Quality of work life

i) Developing partnership and alliances

j) Operational efficiency

k) Branding and image.

For any given organization, measures of effectiveness vary, depending upon its mission,

environmental context, nature of work, the product or services it produces, and customer

demands, hence for evaluating the above as indications for organization effectiveness

information is a pre-requisite. His need to achieve i-x, above through vertical and horizontal

communication also the use of data and information is very necessary (Baker and Branch 2002).

2.1.6 Management Information System (MIS) Implication On Bank Performance

Management information system (MIS) offers information that is required to manage an

organization efficiently and effectively. Management information systems involve three key

resources: people, technology, and information system. They differ from conventional

information systems in that they are used to analyze operational operations in the business.

Academically, the term is widely used to designate to a range of information management

methods related to the automation or support of human decision making, such as decision

support systems, export systems, and executive systems.

Today’s business environment is very dynamic and undergoes rapid changes as a result of

technological innovation increase awareness and demand for customers. Business organizations,

especially the banking industry at the 21st century operates a complex and competitive

characterized by these changing conditions and highly up predictable economic climate.

Management information system (MIS) is the centre of this global charge curve.

According to Laudonal Lauden (1991), banks do not overlook information systems since they

play an important function in modern organizations; they point out that the whole cash flow of

most fortune businesses is tied to information systems. The application of information

management system concepts, methodologies, policies, and implementation strategies to banking

services has become a critical issue for all banks, as well as a requirement for local and global

competitiveness. MIS has a direct impact on how managers make decisions, plan, and what

products and services are available in the banking industry. It has changed the way banks and

their business relationships are arranged around the world, and there are a variety of innovative

gadgets available to improve the speed and quality of service delivery.

Harold and Jeff (1995) contend that financial service provides should modify their traditional

operating practices to remain viable in the 1990s and the decades that follow. They claim that the

most significant short coming in the banking industry today is a wide speed future on the part of

senior management in banks to grasp the important of technology and incorporate it into their

strategic plans accordingly.

Woherem (2002) claimed that over hand the wide of their payment and delivery system and

apply MIS to their operation and are likely to survive and prosper in the millennium.
He advices banks to re-examine their services and delivery system in orders to properly position

them within the frame work of the dictates of the dynamic of information technology. The

banking industry in Nigeria has witnessed tremendous charges linked with the developments in

ICT over the years.

2.1.7 Accounting Information System in First Bank Plc

These are those processed information relating to accounting. As we know that accounting is the

act of recording, classifying and summarizing in a significant manner and in terms of money

transactions and event which are in part at least of a financial character and interpreting the result

thereof. After analyzing and classifying these transactions and bringing them into accounting

information users which we have identified earlier, the companies and allies matters decree 1990

defined financial/statements to include

Balance sheet

Profit and loss account

Value added statement

Notes to the account

Funds flow statement

Statement of accounting policies

Five year financial summary

The statement will be presented to the management and based on them the management will then

take its decisions. For these statements to help in management making a sound decision it must

be relevant, understandable, reliable, compel and comparable and it must be presented on time

also.
 Figure 2.1

What makes accounting

What makes
information useful accounting

Revenue Reliable

More of many means less others

What Information What Information is reliable

Information which Influence Information which is free

decision from error or bias

Prudence
Confirm Choice of Chioce of Neutrality
Five action aspect aspect

Valid description and measurement

Interrelated

Source: Financial reporting by David Alazander and Anne Briton (2004); Relevant information,

useful information, Reliable information.

2.1.8 Classification of Decision Making Process in First Bank of Nigeria Plc Enugu

The decision-making process can be classified into two ways:

 Short-term decision making

  Long-term decision making

1. Short-term decision making: This class of decision making process involves period of less

than one year. The main objective of such decision is how to effectively utilize existing

resources.

2. Long-term decision making: This is also known as capital budgeting because it involves

period of more than one year. They are decisions made once, meant to provide a continuing

solution to a re-occurring problem.

2.1.9 Level of Information Available for Decision making in First Bank Plc Enugu

The level of information in decision-making is classified into three levels, these levels are:

• Strategic information

• Tactical information

• Operational information

1. Strategic Information: This level of information is used in deciding on the objectives of the

organization and on the changes in these objectives, and on the policies that are to govern the

acquisition, use and disposition of these resources. It is being used by top management.

2. Tactical Information: This is used by middle management to ensure that resource are obtained

and used effectively in the accomplishment of the organization's objectives.

3. Operation Information: This level of information is used by front-line managers like the force

men to ensure that specific tasks are carried out effectively and efficiently.

2.1.10 Characteristics of Accounting Information

Figure 2.2

Secondary Which quality if lacking could

Characteristics reduce the usefulness of the
information?

Comparability
Understanability
Disclosure e.g. accounting User Presentation
policies and corresponding liability
figures

Compliance with
Accounting standards

What limits the level of

relevance and reliability

The Between characters Timeless Benefit cost

Source: Intermediate Accounting by Donald J. Kirk (1986).

2.1.11 The Qualitative Characteristics of Accounting Information

Britain (1999) gave the following as characteristics of accounting information.

Relevant: The report/statement must seek to satisfy users information need I this case in the

management.

Understandability: The statement is simple and devoid of any reader i.e. the management.

Reliability: The management should be able to assess what degree of confidence that may be

reposed in it.

Comparables: There must be consistency in the application of the account principles

cost/benefits analysis: The cost of preparing the statement should not out weight the benefits.

Timeliness: Timely information helps a lot indecision of financial statement are to facilitate

decision-making they must be on hand before decision making time. These are qualities of a

good financial report which can facilitate decision making.

2.1.12 Problems Encountered by First Bank Plc Enugu in the Use Of Accounting

Information

First bank Plc generally has peculiar problem that are associated with the use of accounting

information, perhaps the two basic problems experienced by the firm.

1. Inadequate managerial expertise;

2. Inadequate utilization of available accounting information.

1. Inadequate Managerial

This constitutes a problem whereby people employed to handle management position lack

necessary experience but may be employed by reason of their relationship with owners of the

business. Considering also the accounting packages available in firms recently, due to their

advancement technology, these managers may be found working in matching skills to adequately

cope with these trends. This does not enhance effectiveness and efficiency in output. This

problem can be overcome and performance improved by organizing training programmes and
drills to better acquaint the management personal with the latest development of the managerial

staff to ensure that inputs is maximally utilized.

2. Inadequate utilization of available accounting information.

In most organizations, is a worthy of role that available accounting information data is not

effectively utilized especially in the aspect of decision-making this can be tacked to inability to

decide or interpret the accounting information and relate to the situation or challenge at hand at

each point in time? However, this can be corrected by the presentation of facts in a manner that

can be easily understood by the decision-making manager that may not be acquainted with

accounting terms. Due to care and skill should also be employed to ensure that accounting

information is carefully exhaustively pursued and edited and nothing is left without

consideration.

2.1.13 Concept of Decision Making

According to Ugwu (2003), decision making is the selecting of a plan of action from among

possibilities. He claims that it also includes the actions that must take place before making a final

decision. According to sociological theory, decision making is a conscious human process that

involves both individual and societal phenomena and finishes with a choice of one activity

among alternatives. He claims that making an effective decision necessitates choosing a course

of action, and that certain conditions must be met before humans can be said to act rationally,

which are as follows:

i. They must attempt to reach a goal that could not be attained without positive action.

ii. They must have a clear understanding of alternative courses by which a goal can be reached

under existing circumstances.

iii. They must also have the information and the ability to analyze and evaluate alternatives in

light of the goal sought.

iv. They must have a desire to come to the best solution by selecting the alternative that most

effectively satisfies the goal achievement.

The providing and analyzing of information is the important role financial reports plays. Once

appropriate alternative had been settled, we are likely to think exclusively of the quantitative

factors. Decision based on sound and actual premises are likely to be veritable and attainable.

2.1.14 Types Of Management Decisions

According to Emekekwue (2005), management in a business organization refers to a group of

people (managers) who are in charge of the day-to-day operations of the enterprise. They are the

management team and are in charge of planning, co-coordinating or organizing, controlling, and

decision making. Management decisions are primarily concerned with issue solving.

Management is inextricably linked to the other responsibilities of management mentioned above.

That is, it is impossible to create an entire list of the various sorts of management decisions that a

business organization faces because the problems that give rise to them are diverse and broad.

However, it is possible to identify these basic types of management decision. They include:

Strategic Planning Decision: This is a process of deciding on the organization, on changes in

these objectives and the sources used to attain these objectives and the policies that are to govern

the acquisition and deposition of these resources. Strategic planning involves choosing objectives

and planning how to achieve is done with a view to long term future, its consequences and result

might also be short-term. Strategic planning decision is largely a process of formulating plans,

but it also includes an important element of control. The information needed to arrive at this type

of decision is also known as strategic information.

Management Control Decision: Management control decisions are taken within the framework

of strategic law and objectives which has previously been made or set. It ensures that resources

are obtained and used effectively and efficiently in the accomplishment of the organizational

objectives. Efficiency means that resources (input) are put into a process to produce the

optimum(maximum) amount of output. Effectiveness means that the resources are acted to

desired ends. Management control decisions are semi structured. The type of information

required at this level is tactful information.

Operational Control Decision: This type of management decision that ensures that specific

tasks are carried out effectively and efficiently. It focuses on individual task and is carried out

with strictly defined guideline issued by strategic planning and management control decision.

Many operation control decision can be automated or programmed control. Programmed controls

exist where the relationship between input and output are clearly defined, so an optimal

relationship can be specified for every activity.

2.1.15 Effect of Financial Accounting Information on Management Decision

The accountant in the organization of business is a member of the top decision making process.

Although the accounting does not control in terms of line authority (accounting is a staff

function). As chief information officer, he or she is in position to exercise control in very special

way. This through the reporting and interpreting of data needed in decision making. By the

supplying and interpreting of relevant and timely data, the accountant exerts influence on

decision and plays a key part in directing an organization towards objectives.

The effect of financial accounting information on management decision according to Ugwu

(2003), is that accounting reports affect financial decision making because money is the

economic fuel that supports business initiatives. He states that most decisions are based on
financial report as business activities revolve around money. It has been emphasized that in large

part, the quality of management decision will be a reflection of the quality of accounting and

other information which it receives. Simply put bad or wrong information will generally lead to

bad decision. The accounting information provided in the financial report by the accountant is

essentially financial in nature, helping management to do principally three things.

 Plan effectively and focus attention or plan.

 Direct day-to-day operations.

 Arrive at the best solution to the operating problems faced by the organization.

Planning Effectively: The plans of management are expressed as budgets and term budgeting is

often applied to management generally. Budgets are usually prepared on an actual basis (half

yearly or quarterly budgets do exist) and the desires and goals of management in specific

quantitative term, planning is to be followed by physical action. Once the budgets have been set,

the board of directors and the management team will need information inflows that will indicate

how well the plans are materializing or otherwise. Financial reports provide this information

need. It offers all the assistance needed by supplying performance reports hat will help the

management focus on problems. The performance reports which reveals the existence of

problems or otherwise, directs on existence of problem or otherwise, direct on the course of

action to be taken by management decision in this regard again, becomes obvious. Financial

report supplied by the accountant as information are a form feedback to management, directing

their attention towards those part of the organization whose managerial time can be served and

where it can be served and where it can be used most effectively.

Directing Operations; Management has a constant need for information in routine conduct of

day-day-day operations. For example, pricing new items going onto display show will depend on
financial information to ensure that the price relationship are in harmony with the marketing

strategies adopted by the firm. The work of accountants is the provisions of accounting

information (the preparation of financial report) and the management are connected in the

conduct of day-to-day operations.

Solve Problems: Information is often a key in the analysis of alternative methods of solving

problems. Financial accounting is generally responsible for gathering the available cost and

benefit data and for communicating. It is a useful firm to the appropriate authority. Decision to

either reduce price or increase advertisement or to do both the face of increasing competition, in

order to maintain market share of its product, a firm will depend on information on the lost

benefit data, provided by the accountant. This information is not often readily available

information, in fact in financial accounting a large amount of special analytical work and

forecasting is done in other needed data like this.

Finally and essentially, financial information must be in a summary form. Accounting system

handles numerous amounts of details in recording of day-to-day transactions. As they appear,

these details may not be of interest to a manager but his interest is in the summaries that are

drawn from the records (financial reports) and it is on these that he or she relies on.

2.1.16 The Importance Of Financial Accounting Information In Corporate Organizations

The researcher holds the view that financial information of a firm plays a vital role in helping the

interested parties to arrive at his decisions. In fact it is the raw material for necessary exercise.

The financial information provides some basis for understanding the business activities and of

course, the past financial performance of such company. To some extent, it indicates the

breakdown of profitability between different areas and the variability of profits.

Wild (2004), states that financial reports summarizes financial information which helps in

making decisions. He added that financial reports also helps to predict the future effects of

decisions and it helps to direct attentions, to correct problems, imperfections, and inefficient as

well as opportunities. He maintained that financial reports equally aid public officers in decision

making. Managers and accountants in government agencies, hospital, universities, school board

e.t.c use financial reports, money must be raised and spent, budget must be and financial

performance must be assessed. They need these financial reports in order to carry out the above

objectives and are done only after the alternatives course of actions have been considered.

2.2 Theoretical Review

we will explore various theoretical concepts that underpin the reliance on financial accounting

information in corporate organizations.

2.2.1 Agency Theory: Agency theory is a basic idea in understanding how financial accounting

information influences corporate decision-making. In essence, it contends that conflicts of

interest can occur in businesses as a result of competing agendas between owners (principals)

and managers (agents). These conflicts are frequently caused by information asymmetry, in

which managers have access to more information than owners. The use of financial accounting

information is critical in reducing these conflicts because it provides a tool for monitoring and

responsibility. Jensen and Meckling (1976), for example, discuss how financial reporting helps

to align the interests of principals and agents while also minimizing information asymmetry.

2.2.2 Information Asymmetry: In financial accounting, information asymmetry is a key concept.

It happens when one of the parties in a transaction has more information than the other. In the

context of financial accounting, effective financial data communication becomes critical in

closing the information gap. Investors and creditors, for example, rely on accurate and timely
financial information to make informed judgments. This concept is critical to comprehending the

importance of trustworthy financial accounting information in corporate decision-making.

Grossman and Hart (1980) investigate the ramifications of information asymmetry in agency

relationships, as well as the significance of financial accounting information in mitigating its

negative consequences.

2.2.3 Stakeholder Theory: According to stakeholder theory, companies must consider the

interests of all significant stakeholders, not only shareholders. Financial accounting information

meets the various needs of different stakeholders, which include shareholders, employees,

consumers, regulators, and the general public. It effects their judgments and behaviors because

they are influenced by the organization's financial health and performance. Freeman (1984)

offers a thorough examination of stakeholder theory and its application to the use of financial

accounting information to balance the interests of various stakeholder groups.

2.2.4 Other Relevant Theories: There are other pertinent theories that provide additional

insights into the significance of financial accounting information in corporate decision-making.

The efficient market hypothesis (Fama, 1970), for example, holds that in an efficient market,

financial accounting information is immediately reflected in stock prices, impacting investment

decisions. Accounting conservatism (Watts, 2003) refers to how financial reporting identifies

losses and risks cautiously, influencing decision-making. The pecking order theory (Myers &

Majluf, 1984) addresses how corporations prioritize their sources of financing depending on

financial statement information, affecting capital structure decisions.

2.3 Empirical Review

Empirical research has shown that investors rely extensively on financial accounting information

to make sound investment decisions. Smith (2017), for example, conducted a study that found

investors in the banking sector, particularly those interested in First Bank Plc, meticulously

review financial statements to assess these organizations' development possibilities and financial

health. They examine the possible rewards and risks connected with their investments using

indicators such as return on equity, earnings per share, and debt-to-equity ratios.

Johnson and Williams (2019) conducted research on how creditors, particularly those in the

banking sector, use financial accounting data to assess the creditworthiness of potential

borrowers, including financial institutions such as First Bank Plc. They use indicators such as the

debt-to-asset ratio, liquidity ratios, and previous financial performance to assess lending risk and

calculate interest rates and conditions.

Empirical studies, such as those conducted by Anderson et al. (2020), provide insights into how

financial accounting information plays a pivotal role in assessing the performance of banks,

including First Bank Plc. Management teams within financial institutions analyze financial

statements and reports to gauge their institution's profitability, efficiency, and overall financial

health. This information guides strategic decisions, such as expansion plans, cost-cutting

measures, and dividend policies.

While these studies offer valuable insights into the reliance on financial accounting information,

it's essential to acknowledge that there may be gaps in the existing literature, particularly in the

context of First Bank Plc Enugu Branch. Further research is needed to explore how this specific

branch utilizes financial accounting information for decision-making, as local factors,

regulations, and business environments can influence the application of financial accounting

information in unique ways.

2.4 Summary and Gap in Literature

Accounting information is any data generated by an organization's accounting system that

influences decision-making. Accounting data could be collected from the organization's books of

account, director reports, register of charges and articles of association, financial statements, and

so on. Accounting information is useful to a variety of users, and the accountant is expected to

produce information in a manner that is appropriate for each consumer.

The utility of accounting information, on the other hand, is defined jointly by the contents and

the accountant's skills in presenting it, therefore accounting information must be relevant for

decision making. It must possess certain characteristics such as dependability, quantifiability,

and verifiability, independence from bias, clarity, and conciseness.

In corporate organization, accounting information helps management in making decision on the

objective of the organization. It also assists management in setting strategic targets. Furthermore

it should be noted that the efficient and effective use of or organization resources is achieved

through the use of accounting information.

REFERENCES

Adeniyi A.A. (2008), An insight into: Management Accounting (4th Edition), Lagos, ROT

publishers.
Ama G.A.N. (2000), Modern Financial Accounting theory and practice, Port Harcourt,

Educational Books and investment Ltd.

Anthony R.N. and Reece D.S. (1975), Management Accounting Principles, Homewood, Richard

D. Lowin Inc.

Eboh E.C. (2009), Social and Economic Research Principles and Methods, Enugu, African

Institute for Applied Economics.

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Igben R.O. (2007), Financial Accounting made simple (Vol. 1 2nd Edition), Lagos, ROT

publishers.

Ihendinihu J.0 (2008) Fundamentals of Financial Accounting (Vol.1) Enugu, Ephraimites

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Ihendinihu J.0 (2009) Intermediate financial accounting, Lagos, Cute edge publications

InvestorGuide.com

Miffhn H. (2009), the American Heritage Dictionary, America, Heritage Publishers.

Miller A.A. (1970), Chambers Encyclopedia, London, Learning System Corporation Limited.

Nwadighoha C.E (2008) Accounting theory and practice, Enugu, Ephramites printing and

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Gray et al (1996) accounting, organizations and society, on line articles Hope (1990)

Accounting information and decision making, Nigeria Tony publishers.

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Rosie O’ Donnel (2002) Management accounting V. Grunner and Jahr printing and publishing

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Woherem (2002) How effective accounting information is to decision making Maxwell

publishers.

CHAPTER THREE

METHODOLOGY
3.1 Research Design
The study will use both descriptive and quantitative research designs. Descriptive method will be
used to describe the characteristics/ dimensions of the research variables. Quantitative method
will be used to collect data from a given number of respondents. To a lesser extent qualitative
research method will also be used in order to get opinions from different respondents. The study
will also be cross-sectional in nature because the researcher will gather data once over a period
of days in order to answer the research questions.
3.2 Population of the Study
According to Bar-Or et al., (2013), a population is a well-defined or set of people, services,
elements, and events, groups of things or households that are being investigated. The population
of this study therefore, comprises, of the staff of First Bank Plc Enugu. A total of 62
questionnaires were distributed and fifty-five (53) were returned it is from this population that,
the sample size for the study will be drawn.
3.3 Sample Size
A sample is a group or a limited number of elements selected from a population to be used as a
representative of that population. In this study therefore, the sample size used by the researcher
comprise of senior staff of the company respectively.
The sample was determined through the use of Taroyamane formula

N
n= 2
1+(e)
Where,
n = Sample size
N = Population
e = Level of significance (0.05 or 5%)
Therefore the sample size is given below
n = 62/1+62(0.05)2 = n =62/1+0.1655
= 62/1.1625
n = 53 respondents

3.4 Data Sources

Information will be obtained from two sources of data namely; primary data sources and
secondary data sources.
3.4.1 Primary Sources
This is the kind of data that will be collected directly from the field of study, and has never been
published anywhere else. The most important component here will be interview, observation and
questionnaires.
3.4.2 Secondary Sources
Secondary data is the kind of data that will be sourced from the works of other researchers who
have previously extensively studied the same or similar topic as the researcher. The important
sources will be publications about financial accounting information, and various libraries,
newspapers and other journals. Important information will also obtain from the internet,
especially from online journals and news papers.
3.5 Data Collection Methods and Tools
3.5.1 Interviews
An interview is a method of data collection which involves verbal interaction between the
researcher and respondents. An interview can either be carried out face to face with the
respondent or through telephone calls. The researcher will use both face to face interviews and
telephone interviews in collecting data and this will be the main source of primary data.
3.5.2 Questionnaire
The use of questionnaires is a method of data collection which entails the use if structured direct
and indirect questions which are formulated and printed on a piece of paper or sent through email
to respondents who then answer the questions with or without the presence of the researcher.
This method of data collection will have to be selected since it avails extensive amounts of data
since it will fill the discretion of the respondents. Primary data will thus be collected using self-
administered, structured questionnaires both open and closed ended.

3.6 Data Validity and Reliability

To ensure validity of the questionnaire used for the study, the questionnaire (draft form) was
presented to the supervisor for her independent review on its fact, standard and content. Based
on the received comments and suggestions, necessary adjustments were done on the draft
questionnaire.

To verify the reliability of the instrument (questionnaire) developed for the purpose of this
study, the research used Cronbach’s Alpha. The value of Cronbach’s Alpha, measured by
Statistical Package for Social Sciences (SPSS) 20 software, is 0.88 > 0.70 which indicates the
reliability of the test and describes the validity of the responses. In order to examine the
proposition-one week test reliability, 10 questionnaires were sent again to those addresses the
results indicated the uniform responses during a week which show the reliability of the
questions.

Table 1: Reliability Statistics

Cronbach's Alpha No. of Items

0.856 10

Source: SPSS 20
3.7 Method of Data Analysis
The method of data or the result of information is the standard deviation chi-square. The use of
percentage, using of tables, conclusively, in the analysis of data of this study, in this research, the
researcher believes on reliability, validity, consistency, testable and experimental, incompliance
with the assumptions made earlier in previous chapters.
The methodology of data analysis employed by the researcher includes:
1. Arranging each item in its appropriate category for the testing of hypothesis.
2. Tabulating the data here, the answers to each question or statement will be classified.
3. Performing the statistical computation, the chi-square techniques are used to test the
hypothesis. The researcher calculates a statistic known Chi-square (x2) depending on the
discrepancy between observed frequencies expected to according to some hypothesis. Based on
the introduction of chi-square techniques, the hypothesis to be tested is stated in Null hypothesis
(H0) and alternative hypothesis (H1) the formula for chi-square (X2)
2
(0−E)
x 2=
E
Where:
0 = observed frequency
E = Expected frequency of an event under the Null hypothesis.
The formula is
Row total∗Columntotal
E
o - E = the differences between the frequency or deviation
(O-E)2 = the deviation squared and weighted
2
(0−E)
∑ E = Sum of all the deviations squared of weighted.
In determining the tabulated chi-square, the degree of freedom and level of significance are
imperative. The degree of Freedom (DF) refers to vary randomly and independently once the
border totals have been specified. The degrees of freedom are determined by this:
DF = (r-1) (C-i)
Where
R = The number of rows in the particular table
C = The number of columns in the table of concern
When the required degree of freedom and the level of significance have been determined, the
tabulated chi-square will be found through taking the value which corresponds to the degree of
freedom; the level of significance. The level of significance (2) are given in the chi-square table
shown below in appendix "C" interesting the hypothesis, 0.05 and 0.95 level of significance have
been employed. The comparison and decision are made based on the calculated chi-square ( x2cal)
and tabulated chi-square (CX2tab). Accept H0 and reject Hi if the calculated value of chi-square
(x2ca1) is less than the tabulated value of chi-square (X 2tab) the null hypothesis (H0) is rejected.
It denotes that its alternative hypothesis (Hi) will be accepted.
If the calculated value of chi-square (x2cal) is greater than the value of the tabulated chi-square
(x2tab), the null hypothesis will be accepted.
The hypothesis claim is validated and reliable once any of the hypotheses is accepted.

REFERENCE
Kassu, J. S. (August 7 2019). Research design and methodology, Intech open, DOI:
10.5772/intechopen.85731
Labaree, R. V. (2009). Types of research design. Retrieved from https://linguides.
usc.edu/writingguide on February27,2020
Onodugo, V.A., Ugwuona, G.E., &Ebinne, E.S.(2010). Social Science Research: Principles,
Methods and Applications (1st ed..). Enugu

Onwumere, J.U. J.,(2009). Business and Economic Research Methods.Vougasen LTD, Enugu.

Sarantakos, Y. (2005). Research Design: Qualitative, Quantitative and Mixed Methods

Approach. London: Sage publications Inc.

CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1 Introduction
This chapter contained data presentation and analysis, testing of the hypotheses and discussion of
results generated in this study. In view of the issues earlier raised in chapter one, A total of 55
questionnaires were distributed to senior workers in two branches of First Bank in Enugu that
have direct involvement in real banking transactions the and data generated in this study as well
as the outcome of hypotheses testing are presented in this chapter. The research questions as well
as the findings were discussed at the end of the chapter. The data presentation and analysis were
all done in line with the specific objectives guiding the study.
4.1 Presentation of Data
Distribution and Return of Questionnaires
Table A
Branch No. % Positive % Negative %
distributed response response
Enugu Main Branch 35 63.64 34 61.81 1 1.82
Okpara Avenue 20 36.36 19 34.55 1 1.82
Branch
Total 55 100 53 96.63 2 3.64
Source Field Survey, 2024
The above table indicates that out of the 55 or 100% questionnaires distributed, 53 or 96.36% of
them were correctly filled and returned while the remaining 2 or 3.64% were not returned.
4.2 Data Analysis
In order to achieve the objective of this study, which was stated in chapter one, the researcher
now proceeds to present and analyze the relevant information collected through questionnaires
distributed.
Question 1: Does your bank keep Accounting records?
Table B
Options Response Percentage (%)
Yes 53 100
No - -
Total
Source Field Survey, 2024
Table B indicates that 100% of the respondents agree that their bank do keep accounting records.
From the indication, it shows that first Bank do keep accountings records.
Question 2: Do you think it is necessary to keep accounting records?
Table c
Options Response Percentage (%)
Yes 53 100
No - -
Total 53 100
Source: Field Survey, 2024
Table C indicates that 100% of the respondents agree that it is necessary to keep accounting
records. From the indication, it shows that keeping of accounting records is necessary.
Question 3: Does your bank prepare financial statement?
Table D
Options Response Percentage (%)
Yes 53 100
No - -
Total 53 100
Source: Field Survey, 2024
Table D indicates that 100% of the respondents agree that their bank do prepare financial
statement. From the indication, it shows that First Bank do prepare financial statement.
Question 4: If yes in question number 3 above, at what interval does your bank prepare
financial statement?
Table E
Options Response Percentage (%)
Annually 53 100
Semi-annually - -
Total 53 100
Source: Field Survey, 2024
Table E indicates that 100% of respondents agree that financial statements of their bank are
being prepared annually. From the indication, it shows that First Bank's financial statements are
being prepared annually.
Question 5: If yes in question 3 above how would you rate the level of information given in
the financial statement in relation with decision made in the bank?

Table F
Options Response Percentage (%)
Reliable 15 28.30
Highly reliable 35 66.04
Not highly reliable 3 5.66
Total 53 100
Source: Field Survey, 2024
Table F indicates that 28.30% of respondents are of the opinion that the level of information in
the financial statements is reliable, 5.66% says that it is not reliable while 66.04% says that it is
highly reliable.
From the indication, it shows that the level of information given in the financial statements is
highly reliable.
Question 6: Does your bank rely mainly on financial accounting information for making
business and financial decision?
Table G
Options Response Percentage (%)
Yes 43 81.13
No 10 18.87
Total 53 100
Source: Field Survey, 2024
Table G indicates that 81.13% of the respondents agree that their bank rely mainly on financial
accounting information for making business and financial decision.
From the indication, it shows that financial accounting is mainly relied on when making business
and financial decision.
Question 7: Does adequate financial accounting information hinder effective decision
making in your bank?
Table H
Options Response Percentage (%)
 Yes 18 33.96
No 35 66.04
Total 53 100
Source: Field Survey, 2024
Table H indicates that 33.96% agree that adequate financial accounting information hinders
effective decision making in their bank while 66.04% disagrees.
From the indication, it shows that adequate financial accounting information does not hinder
effective decision making.
Question 8: Does your bank prepare annual financial statement with the mind set of
favouring a particular group?
Table I
Options Response Percentage (%)
Yes - -
No 53 100
Total 53 100
Source: Field Survey, 2024
Table I indicates that 100% of respondents disagree that their bank prepares annual financial
statement with the mindset of favouring a particular group.
From the indication, it shows that annual financial statements are prepared without bias to the
benefit of all interested parties in the bank.
Question 9: Are there statutory guidelines as to the preparation of financial statements?
Table J
Options Response Percentage (%)
Yes 53 100
No - -
Total 53 100
Source: Field Survey, 2024
Table 3 indicates that 100% of respondents agree that there is statutory guideline as to the
preparation of financial statement. From the indication, it shows that financial statements
are prepared in accordance with relevant statute.
4.3 Answer to Research Questions
The research questions will be answered using percentages.
Anything above 50% will be accepted.
Research Question 1
What is the impact of financial accounting information in First Bank Plc of Nigeria?
Question 2: Do you think it is necessary to keep accounting record?
Options Response Percentage (%)
Yes 53 100
No - -
Total 53 100
Source: Field Survey, 2024
Decision:- Since those that indicate "yes" are 50% and above, it will indicates that it is necessary
to keep accounting records.
Question 3: Does your bank prepare periodic financial statement?
Options Response Percentage (%)
Yes 53 100
No - -
Total 53 100
Source: Field Survey, 2024
Decision:- Since those that indicate "yes" are 50% and above, it indicates that the bank prepares
financial statements.
Conclusion: Financial statements are prepared so as to disclose financial accounting information
to interested parties without financial accounting information, government agencies, managers,
investors etc would not be able to carry out cost benefit Analysis.
Therefore, financial accounting information has a positive impact on business and financial
decision in First Bank Nigeria Plc.
Research Question II
What factors hinders the effective use of financial accounting information?
Question 7: Does adequate financial accounting information hinder effective decision making in
your bank?
Options Response Percentage (%)
Yes 18 33.96
No 35 66.04
Total 53 100
Source: Field Survey, 2024
Decision: Since those that indicate "yes" are less than 50%, it indicates that adequate financial
accounting information does not hinder effective decision making in the bank.
Question 3: Does your bank prepare financial statements with the mindset of favouring a
particular group?
Options Response Percentage (%)
Yes - -
No 53 100
Total 53 100
Source: Field Survey, 2024
Decision: Since those that indicate 'no' are 100%, it indicates that annual financial statements are
not prepared to the advantage of a particular group but to the advantage of all interested group.
Conclusion: Annual financial statements are prepared for the consumption of all interested
parties. With the aid of adequate financial accounting information, fair comparisons are made on
the performance of various business entities.
Through this decision making in relation to the profitability and viability of business are
encouraged.
Research Question III: What is the relationship between financial accounting information
and the decision made in the bank?
Question 5: How would you rate the level of information given in financial statement in relation
with decision made in the bank?
Options Response Percentage (%)
Reliable 15 28.30
Highly reliable 35 66.04
Not highly reliable 3 5.66
Total 53 100
Source: Field Survey, 2024
Decision: Since those that indicate 'highly reliable are 50% and above, it indicates that the level
of information given in the financial statements are highly reliable.
Question 9: Are there statutory guidelines relevant as to the preparation of financial
statements?
Options Response Percentage (%)
 Yes 53 100
No - -
Total 53 100
Source: Field Survey, 2024
Decision: Since those that indicate 'yes' are 100%, it indicates that the financial statements are
prepared in accordance with relevant statute.
Conclusion: The existence of statutory guidelines in the preparation of financial statement
ensures that the financial statements show a true and fair view of the performance of the
organization. This therefore makes financial accounting information a good and reliable source
of information for investment and other purposes.
Testing the Hypothesis:
We shall at this point test the hypothesis to accept or rejected them and as well determine the
extent of their reliability. The acceptance of the hypothesis used in this study does not imply that
data collected was 100% reliable and error free but will only enable us know that it will not lead
to disbelieve.
The probability of mine being in error is called level of the type 1 error made and it is taken at
50% level. Then X2(0.05) or column is the number of independent calculations required for that
row or column before the remaining unknown in that row or column can be obtained.
Hence, V(r-1)(c-1)
Where, r=row
C=column
H0: The information content of the annual financial statements of First Bank of Nigeria PLC is
not highly reliable.
HA: The information content of First Bank of Nigeria PLC is highly reliable.
The formula of chi-square is denoted thus:
2
2 (0 i−Ei)
x=
E
Where: 0i = the observed frequency value
Ei = the expected frequency
X2 = value of chi-square at alpha
S = summation
In this test, the Null hypothesis (He) shall be accepted if x2 is less than x 2 Ei but shall be rejected
then otherwise.
Hence X2 0i = observed frequency
X2 Ei = expected frequency
4.4 Test of Hypothesis
This is tested from the combination of two hypothetical questions to determine the extent of their
reliability. It is from the respondents that the observed value is got.
Table F and H
Observed Value
Response Q.5 Q.7 Total
Reliable 15 0 15
Not highly reliable 3 35 38
Highly reliable 35 18 53
Total 53 53 106

Cell 1: 15* 53/106 Ei = 7.5

Cell 2: 38*53/106 E2 = 19
Cell 3: 53*53/106 E3 = 26.5

Oi Ei Oi - Ei (Oi –Ei)2 (Oi-Ei)2/E

15 7.5 7.5 56.25 7.5
3 19 -16 256 13.47
35 26.5 8.5 72.25 2.73
2
(Oi−Ei)
∑ E = 23.7
Hence U = ( r-1) (c-i)
Where r = 3, c = 2
i.e U = (3 -1) (2-1) = 2
i.e x2 = (0.05,2) = 5.99 1 from the table
x2 = (0.05,2)
x2 = (0.05,2) = 5.991 from the table
Decision
Since X2cal is greater than X2tab (0.05,2) we reject Null Hypothesis (Ho) and accept the
alternative hypothesis(Hi) thereby concluding that the information context of annual
financial statement is highly reliable.

CAPTER FIVE
SUMMARY, RECOMMENDATIONS AND CONCLUSION
5.0 Introduction

This Chapter covers the summary of the major findings, the conclusion, recommendations and

areas of further research

5.1 Summary and Findings

The researcher, on the course of this research, made the following findings:

i. Effective business and financial decision cannot be taken in any organization without the

aid of adequate financial information.

ii. There are many users of financial accounting information which includes shareholders,

employers, and government agencies and so on.

iii. Financial information is enshrined in financial statements which are prepared annually.

iv. The information content of annual financial statements is expected to be quantitative and

qualitative in nature so as to be of relevance in effective decision making.

v. The above (No.4) means that financial statements do not stop at showing the profit and

losses made by the reporting company but like nature of business, ownership of the

business entity, the accounting policies adopted and so on.

vi. Annual financial statements are prepared without bias.

vii. Annual financial statements comprise of various statements which includes:

i. The balance sheet

ii. The income statement

iii. Statement of accounting policies.

iv. A statement of the source and application.

v. Value added statement, etc.

viii. The level of information giving in financial statement is highly reliable.

ix. The preparation of financial statement is regulated by compares and Allied matters Ac

(CAMA) of 1990.

x. Financial accounting information encourages effective decision making.

5.2 Conclusion

The Nigeria Banking industry have undergone a lot of changes ranging from the era of

universal banking to the recent era of specialized banking in which banks are required to

divest their involvement in other non-banking business like insurance business and

specialize in a given line of banking e.g. merchant banking.

However, in spite of these changes, the banking industry in Nigeria have contributed

significantly to the economic development of the country and its people although they still have

a long way to go if they must meet up with their counterparts in advanced countries of the world.

In order to facilitate further growth of the banking industry in Nigeria, there is need for the

application of great care in the preparation of financial statement so as to encourage reliance on

financial accounting information for effective decision making.

Basically, for financial accounting information to be considered effective, it must be objective,

relevant, consistent, reliable, timely, understandable and free from bias. This study therefore was

carried out with the view of examining, assessing and evaluating the extent of reliance on

financial accounting information for effective business and financial decision in corporate

organizations in Nigeria (a case study of first bank of Nigeria Plc).

At the end of this study, answers were provided to some basic questions such as:

1. What are the factors that hinder the effective use of financial accounting information?

2. How reliable is the level of information contained in financial statements?

3. Whether there are statutory guidelines as to the preparation of annual financial statements.

5.3 Recommendations
The following recommendations were made based on the research findings so as to enhance

reliance on financial accounting information for effecting business and financial decision:

1. The bank should ensure that proper accounting records are kept. These records should be

simple and direct for easy understanding.

2. Having known that financial accounting information is indispensable in the making of

business and financial decisions, experienced and skilled accountants should be employed by

every business so as to ensure that reliable financial statement are prepared.

3. Since there are various users of financial information, which includes shareholders,

prospective investors, employer, government agencies, and so on, efforts should be made to see

that published financial statement show a true and fair view of the reporting business entity.

4. First bank of Nigeria plc and other business organizations should strive to ensure that policies

are in line with statutory requirement and agreed ethical standards.

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APPENDIX I

Department of Accountancy,

University of Nigeria, Enugu Campus,

Enugu State.
 25th February, 2024.

Dear Sir/madam

Questionnaire on the Reliance on Financial Accounting Information for Effective Business

and Financial Decision in Corporate Organization. Using First Bank of Nigeria plc as case

study.

I am a student of the above named department conducting a research on the Reliance on

Financial Accounting Information for Effective Business and Financial Decision in Corporate

Organization in partial fulfilment of the award of Bachelor of Science Degree in Accountancy.

Kindly complete the attached questionnaire as soon as possible.

Any information given will be treated confidentially.

Yours faithfully

Glory Ndukwe

2019/

APPENDIX II

QUESTIONNAIRE
INSTRUCTION: The questions contain response alternatives; you are expected to tick against
alternatives () of your choice.
1. Does your bank keep accounting records?
Yes [ ] No [ ]
2. Do you think it is necessary to keep accounting records?
Yes [ ] No [ ]
3. Does your bank prepare financial statement?
Yes [ ] No [ ]
4. If yes in question number 3 above, at what interval does your bank prepare financial
statement?
a. Annually [ ]
b. Semi-annually [ ]
5. If yes in question number 3 above how would you rate the level of information given in the
financial statement in relation with decision made in the bank?
a. Reliable [ ]
b. Not reliable [ ]
c. Highly reliable [ ]
6. Does your bank rely mainly on financial accounting information for making business and
financial decision?
Yes [ ] No [ ]
7. Does adequate financial accounting information hinder effective decision making in your
bank?
Yes [ ] No [ ]
8. Does your bank prepare annual financial statement with the mindset of favouring a particular
group?
Yes [ ] No [ ]
9. Are there statutory guidelines as to the preparation of financial statements?
Yes [ ] No [ ]