The Role of Improving the Quality of Public Accounting Information and Its Impacts on Economic Development. Case Study: the Federal Inland Revenue Service (FIRS)
CHAPTER ONE
Objective of the study
The primary objective of this study is to empirically examine the relationship between improving the quality of public accounting information and its impacts on economic development. Specifically, the study aims to achieve the following objectives:
- To assess the extent to which enhanced transparency and accuracy in financial reporting contribute to increased investor confidence and capital formation.
- To analyze the role of improved accounting information quality in facilitating more efficient resource allocation and market development.
- To investigate the mechanisms through which transparent financial reporting influences corporate governance practices and investor protection mechanisms.
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
Concept of Accounting
Oluwatuyi et al. (2022) defined accounting as the process of identifying, measuring, and presenting economic data to allow consumers to make informed decisions. It involves the measuring, sharing, and analysis of financial activities (Soyode, 2002). Accounting is also defined as the process of documenting, categorizing, and summarizing in a meaningful way and in terms of financial transactions, events, and transactions that are at least partially of a financial nature and analyzing the outcome thereof (American Institute of Certified Public Accounts, AICPA 2015) Accounting is the process of measuring and identifying economic variables in particular organizations and disseminating information based on this measurement to users who need to make educated decisions, according to Shillinglaw and Meyer. Ibrahim (2019) regarded accounting in a variety of perspectives, including as a task carried out by accountants and their substitutes, a system made up of numerous interconnected and interdependent pieces, a management approach (in the broadest sense), and a field of study. The best way to see accounting is as an information system. This information has been compiled, placed in a pertinent context, and distributed to those who might be interested. Information must meet all of the requirements for quality in order to be valuable to decisionmakers. Such information must be readily accessible, pertinent, trustworthy, objective, and timely for the users’ needs. In fact, if such information is to continue to have the desired properties, it must establish clearly defined processes for capturing and providing users with financial information. Herein, accounting is referred to be a means of communication for businesses that reflects the economic and social development of a nation. It is viewed as a tool for both macroeconomic and social regulation, making its success a prerequisite for socioeconomic development (Pintaux, 2012; Boka, 2010).
Accounting information
Accounting information refers to the data and reports generated through the process of recording, summarizing, and interpreting financial transactions and events of an entity (Horngren et al., 2012). It includes financial statements, such as balance sheets, income statements, and cash flow statements, as well as supplementary disclosures and managerial reports that provide insights into the financial performance and position of an organization.
Accounting information plays a fundamental role in decision-making processes for various stakeholders, including investors, creditors, managers, regulators, and government agencies. According to Anthony and Reece (2014), accounting information serves as the primary basis for assessing the financial health, profitability, and solvency of a business, thereby influencing investment, lending, and operational decisions.
The quality of accounting information is determined by its relevance and reliability. Relevance refers to the degree to which information is timely and useful for decision-making purposes, while reliability pertains to the accuracy, completeness, and verifiability of the data (IASB, 2010). High-quality accounting information is both relevant and reliable, providing stakeholders with a dependable basis for evaluating past performance and predicting future outcomes.
Accounting information is governed by a set of standards and principles, such as Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), which prescribe the methods and procedures for preparing and presenting financial reports (Weygandt et al., 2012). These regulatory frameworks aim to enhance the transparency, comparability, and consistency of accounting information across different entities and jurisdictions.
The concept of decision usefulness underscores the primary objective of accounting information, which is to provide relevant and reliable data that facilitate informed decision-making by users (FASB, 2010). According to this perspective, accounting information should enable users to assess the financial performance, risks, and opportunities of an organization and make rational choices that maximize their utility or economic welfare.
Value relevance refers to the ability of accounting information to influence the market value of a firm’s equity or other financial instruments. Studies by Ohlson (2015) and Feltham and Ohlson (2015) have shown that certain accounting measures, such as earnings and book value of equity, possess significant value relevance, as they reflect investors’ expectations about future cash flows and risk-adjusted returns.
Accounting information serves as a cornerstone of financial reporting and decision-making processes, providing stakeholders with the necessary data and insights to assess the performance, prospects, and risks of an organization. By adhering to principles of relevance, reliability, and transparency, accounting information enhances market efficiency, investor confidence, and resource allocation in the global economy.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
This chapter discusses the various methods by which data are collected and analyzed in the process of carrying out this research work by research methodology. This means the methods and designs used by the researcher in the collection and analysis of the data. This chapter will expose the design of the study, population of the study, sampling design and technique, source of data or others are instrument for data collection and method of data analysis.
RESEARCH DESIGN
A research design is the plan for a research project which provides guidelines that directs the researcher toward solving the research problems. It is the approach to be used in conducting a specific enquiry. Two basis approaches were used in the study. They are the survey approach and the case study approach. The survey approach studies both large and small population by selecting and studying sample chosen from the population to discover the relative incidence and also the distribution and interrelations of variables.
A case study approach was also used to explain the “The role of improving the quality of public accounting information and its impacts on economic development which the researcher got their information from some selected the federal inland revenue service (FIRS)
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
In this chapter, the researcher analyses and interprets the data collected from the respondent through the questionnaire and oral interviews. The questionnaire raised and analysed in this and issue to the researcher work 133 were raised and issued to the respondents. The presentation and representation of the information will be based on 133 questionnaire collected below.
The analysis would be based on percentage, but the hypothesis would be tested using regression co – efficient techniques.
The following are the analysis of questionnaire distributed and collected by the respondent.
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
SUMMARY OF FINDINGS
The major aim of this research was to find out the role of improving the quality of public accounting information and its impacts on economic development. Case study: The federal inland revenue service (FIRS). After a careful analysis and interpretation of data generated in the course of this research work, the following findings were made in order to confirm the null or alternative hypothesis stated in this study.
Firstly, there is extent to which enhanced transparency and accuracy in financial reporting contribute to increased investor confidence and capital formation in federal inland revenue service (FIRS).
Secondly, there is role of improved accounting information quality in facilitating more efficient resource allocation and market development federal inland revenue service (FIRS).
Furthermore, there are mechanisms through which transparent financial reporting influences corporate governance practices and investor protection mechanisms
Conclusion
The case study on the role of improving the quality of public accounting information, focusing on the Federal Inland Revenue Service (FIRS), underscores the critical importance of transparent financial reporting in driving economic development. Through an examination of the FIRS’s efforts to enhance accounting information quality and its impacts on economic development in Nigeria. In conclusion, the case study of the Federal Inland Revenue Service highlights the transformative impact of improving the quality of public accounting information on economic development in Nigeria. By fostering transparency, compliance, and accountability, the FIRS has played a vital role in attracting investment, mobilizing revenue, and promoting sustainable economic growth. Moving forward, sustained efforts to strengthen accounting information quality will be essential for advancing Nigeria’s economic development agenda and achieving long-term prosperity.
Recommendation
Based on the findings of the study on the role of improving the quality of public accounting information and its impacts on economic development, particularly focusing on the case study of the Federal Inland Revenue Service (FIRS), the following recommendations are proposed:
- The FIRS should establish robust monitoring and evaluation mechanisms to assess the effectiveness of its initiatives aimed at enhancing accounting information quality. Regular audits and reviews should be conducted to ensure compliance with accounting standards, identify areas for improvement, and measure the impact of these efforts on economic development outcomes.
- The FIRS should continue investing in technology infrastructure and capacity building initiatives to strengthen its financial reporting capabilities. Training programs should be provided to staff members to enhance their skills in accounting, auditing, and financial analysis, enabling them to produce high-quality financial information consistently.
- The FIRS should actively engage with stakeholders, including taxpayers, investors, regulatory bodies, and the general public, to solicit feedback and input on its financial reporting practices. Transparent communication channels should be established to address stakeholders’ concerns, build trust, and foster collaboration in advancing accounting information quality.
- The FIRS should strive to align its financial reporting practices with international accounting standards to enhance comparability, transparency, and credibility. Adoption of globally recognized accounting frameworks, such as International Financial Reporting Standards (IFRS), will facilitate cross-border investment, improve investor confidence, and promote economic integration.
- Regulatory bodies, such as the Financial Reporting Council of Nigeria (FRCN) and the Securities and Exchange Commission (SEC), should strengthen their oversight of financial reporting practices to ensure compliance with accounting standards and regulations. Enforcing rigorous enforcement mechanisms, conducting regular audits, and imposing sanctions for non-compliance will deter financial misconduct and enhance accountability.
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