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PROJECT TOPIC: USEFULNESS OF ACCOUNTING STANDARDS PREPARATION IN FINANCIAL STATEMENTS

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CHAPTER ONE

1.1            INTRODUCTION

GENERAL

There has been quite a lot of criticisms in recent years about accountants and the financial report which they prepare.  A lot of people have had to question the validity of the profit measuring procedures applied in arriving at the profit measuring procedures applied in arriving at the profit disclosed in the published accounts.

Consequently, the profession has found it necessary to do a re-appraisal of the accepted procedures, which had found it necessary to do a re-appraisal of the accepted procedures, which had hitherto dominated accounting field in profit measurement.

Quite a member of proposals have made an attempt in reforming the methods generally in use.  This has resulted in the coming together of different countries with a view to working out modalities for the standardization of these profit measuring and reporting procedures.  This gave birth to the International Accounting Standards Committee (IASC) and local bodies like the Nigerian Accounting Standard Board (NASB) for Nigeria.

The International Accounting Standards (IAS) to be followed by all member countries of which Nigeria is one.  Nigeria on the other hand produces additional Statements of Accounting Standards on Accounting Standards (SAS) in an attempt to make the International Standards meet local conditions.

The Nigerian Accounting Standard Board (NASB), which was inaugurated in September 1992, was charged with the following responsibilities.

a)                 To formulate and publish in the public interest accounting standards to be observed in the preparation of financial statements and to promote the general acceptance and adoption of such standards by prepares and users of financial statements.

b)                To promote and sponsor legislation when necessary in order to ensure that standards developed and published by the board received nation-wide acceptance adoption and compliance.

c)                 To review from time to time the standards developed by the board in the light of change in the social, economic and political environment. since 1982 till date, the board has issued statements of accounting standards and two drafts at completion stages.  The standards so far issued by the board are:-

SAS  1        –        Disclosure of Accounting Policies

SAS  2        –        Information to be disclosed in financial statements

SAS  3        –        Accounting for property, plant, and equipment

SAS  4        –        On stock

SAS  5        –        On construction contracts

SAS  6        –        On extra-ordinary items and prior year adjustment

SAS  7        –        On foreign currency conversion and transactions

SAS  8        –        On accounting for employees retirement benefits

SAS  9        –        On accounting for depreciation

SAS  10      –        Accounting by banks and non-bank financial institution

(part 1).

SAS  11      –        On leases

SAS  1        –        On accounting for deferred taxes

SAS  1        –        On investment

SAS  14      –        On petroleum profit

This work intends to analyze and examine usefulness of these standards in the financial statements with particular emphasis on Guinness Nig. Plc Enugu City.



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