1.1 Introduction
Ethics in Accounting Practice is the methodical investigation of human behaviour standards. It is the field of study that looks at the morality of human behaviour and the morality principle. The rules that guide an individual's or group's conduct in a business setting are known as professional ethics. Professional ethics, like values, offer guidelines for how one should behave with other individuals and organisations in such a setting (Ede, 2015). Professional ethics are norms of behaviour, convictions, and tenets of guidance that are recognized by the industry for people and companies alike. Simple norms of conduct that apply to a variety of professions and are set by professional bodies or their competent members are what professional ethics represent.
This chapter will address the background information that motivated this study, the challenges that prompted it, its aim, and its objectives as a preface to subsequent sections of the study. Additional factors include the study's significance, scope, limitations, research questions and hypotheses, and the definition of technical terms.
1.2 Background of Study
Over the years, the Nigerian society has observed its fair share of corporate scandals in both the financial and non-financial sectors of the economy. According to Ogbonna (2010), any organisation lacking ethical consideration may not survive for a long time to achieve its desired goals and objectives and that of its stakeholders. These corporate entity failures have been attributed to accountants not adhering to the codes of conduct evidenced in the contents of financial reports as well as in the end users' confidence in them (Ogbonna, 2010).
In Nigeria, Accountants' activities are governed by a number of organisations and authorities, along with their moral behaviour. These organisations include the Association of National Accountants of Nigeria (ANAN), the Financial Reporting Council (FRC), the Institute of Chartered Accountant of Nigeria (ICAN), the Companies and Allied Matters Act 2016 (as amended), and the Chartered Institute of Taxation of Nigeria (CITN). A long list of ethical concerns has been provided, including conflict of interest, insider trading, accepting gifts, and professional conduct (Enofe, Edemenya & Osunbor, 2015; Fatoki, 2015), despite the profession having global and local bodies regulating the code of ethics. Ethics is generally concerned with the rightness or wrongness of an act. It deals with human conduct in relation to what is morally good and bad, right and wrong (Rush, 2013).
Despite the universal work ethics of a class or society and the generally accepted nature of moral standards, there are particular codes of conduct for the ever expanding variety of professional vocations. According to Richard, Donald, Arnold, Bernard, Presha (2005), these codes of conduct for ethics relate to well-founded standards of right and wrong that outline what people should do. These standards are typically expressed in terms of responsibilities, rights, benefits to society, justice, or certain laws and virtues.
Omole (2002) says Ethics is the shared normative values which any societies holds dearly and are used to judge the behavior or performance of any member of that society. It set out the minimum acceptable behavior which any member should attain to be regarded as a good ambassador of the society. Furthermore Olufemi Onabanjo (2003) said an act is morally good if it does no harm to anybody, the views that human nature is basically goes has many supporters in the ethical field of philosophy. A secretary can be described as anybody who is assigned to record sp of a meeting, irrespective of his or her secretarial skills.
Occasionally, researchers mix up morality with ethics. According to Ngamen (2014), morality and ethics are not the same thing; morality is more universal in nature, whilst ethics is more particular or specialized. Many professions have specific codes of ethics that are unique to that profession. Generally speaking, if someone commits an offence or crime for instance, murder it is well understood that they will be prosecuted and, if found guilty, will be subject to the full force of the law.
The lack of strict adherence to the highest standards in ethical accounting processes is a regrettable development. Accounting systems create financial statements for audits; therefore acting ethically in the field is more crucial than auditing (Mahdavikhou & Khotanlou, 2011). Stated differently, the responsibilities of an accountant extend beyond their direct customer. Behaving morally is therefore a necessary and anticipated quality (Carrol, 2010). Since ethical conduct necessitates adopting the moral stance, professional ethics are significant to accountants and people who depend on information supplied by accountants.
According to Aguolu (2013), these shortcomings have increased scrutiny of the accountant's work from both inside and outside the profession. A number of ethical topics, including as conflicts of interest, insider trading, impartiality, accepting gifts, etc., have been debated recently. Academics believe that the quality of financial accounts is impacted by all of these ethical difficulties. The establishment of an ethics committee and its duties, including discussing and deciding on moral concerns and maintaining the organization's ethical standards, are outlined in the 2011 code of corporate governance. This has not really yielded the right result as intended as some of the scandals over the past decade have been traced to ethical issues where most times management and auditors compromised integrity for personal and selfish gain to the detriment of the organization.
Therefore, in Nigeria where the research was carried out, the activities that was conducted is to know the Ethical Accounting Practice and Reporting Quality of selected Forms in Osun State.
1.3 Statement of Problems
Investigation revealed that credibility concerns have arisen as a result of the failure of several businesses and corporate organisations throughout the last 20 years, which have exposed investors, workers, and the general public to severe financial repercussions. International financial standards adoption is beginning to take form. Even though many developing nations suffer from poor financial reporting, there aren't many studies that concentrate on accounting ethics and financial reporting in Nigeria.
People occasionally have to deal with issues of will weakness and moral conundrums. Accountants are no exception. An accountant faces several circumstances in their professional life when they are forced to make moral judgements. Because of this, upholding ethical standards is a component of accounting's claim to professionalism. This involves an assurance that the accountancy bodies and their members will not pursue their material self-interests in ways that conflict with their duties to the public interest (Appah, 2010).
Due to their lack of independence from senior executives, some companies manipulated their financial reports by using off-balance sheet financing; others overstated their audited financial statements, and still others covered up their billion-dollar debt. The financial sector crisis that occurred a few years ago also exposed the banks' collusion with the auditors to provide an accurate and impartial assessment. A thorough examination of each of these incidents reveals that they were all the consequence of unethical behaviour; for this reason, it is important to evaluate ethical concerns inside an organisation and their impact on the calibre of financial reporting.
1.4 Aim and Objectives of Study
The aim of the study is to examine the Ethical Accounting Practice and Reporting Quality of selected Forms in Osun State. In achieving this aim, the following specific objectives were laid out as follows:
- To investigate the effect of disclosure of financial reporting quality of Nigerian firms in the study area;
- To examine the impact of objectivity of financial reporting quality of Nigerian firms in the area under study;
- To assess the influence of integrity of financial reporting quality of Nigerian firms in the study area;
- To examine the role of accounting Ethics in improving accountant’s proficiency;
- To examine the effect of professional competence, due care on financial reporting quality; and
- To determine the relationship between accounting ethical standards and financial reporting quality of firms in Osun state.
1.5 Research Questions
The study came up with research questions so as to be able to ascertain the above stated objectives. The specific research questions for the study are stated below as follows:
- Is there relationship between accounting ethical standards and financial reporting quality of firms in Osun state?
- What is the effect of disclosure of financial reporting quality of Nigerian firms in the study area?
- What is the impact of objectivity of financial reporting quality of Nigerian firms in the area under study?
- What is the role of accounting Ethics in improving accountant’s proficiency?
- What is the effect of professional competence, due care on financial reporting quality?
- What is the influence of integrity of financial reporting quality of Nigerian firms in the study area?
1.6 Research Hypothesis
In order to pursue the objective of this study, the following generalized statements have been designed to guide and aids in obtaining the result for the experiment to be conducted. For this work, the null hypothesis will be represented with H0 while the alternative hypothesis will be represented with hypothesis H1.
Hypothesis One
- H0: Professional competence of accountants does not have significant effect on the understandability of their firm’s financial reports
- H1: Professional competence of accountants has a significant effect on the understandability of their firm’s financial reports.
Hypothesis Two
- H0: Objectivity has no impact on financial reporting quality of Nigerian firms.
- H1: Objectivity has a significant impact on financial reporting quality of Nigerian firms.
Hypothesis Three
- H0: There is no significant relationship between accounting ethical standards and financial reporting quality of firms in Osun state.
- H1: There is a significant relationship between accounting ethical standards and financial reporting quality of firms in Osun state.
1.7 Significance of Study
This findings of this research is primarily significant from its search for empirical responses to questions about ethical accounting and financial reporting in Nigeria. The relevance of accounting information is determined by how it influences users' decisions, particularly investors' decisions and how they make those decisions. It follows that reporting relevant accounting data is crucial from an ethical perspective.
Research on how ethics influences the significance of financial reporting quality is crucial for managers, accountants, auditors, regulatory agencies, policy makers, and investors. The study's conclusions also add to the corpus of information previously available on ethics and its relationship to the worth of financial reports from companies that are listed on the Nigerian stock exchange.
The goal of the study is to serve as a reminder to professional accountants who offer technical knowledge in financial reporting to adhere to the code of ethics established by their profession. This study will also act as a foundation for future research in this area for other academics and researchers, and if used appropriately, it may even go so far as to offer fresh insights into the subject.
1.8 Scope of Study
The scope of the research is focused on the Ethical Accounting Practice and Reporting Quality of selected Forms in Osun State.
1.9 Limitations of the study
During the course of this study, there were some problems encountered which stood as limitations to the research work. Some of the limitations include:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Research Material: availability of research material is a major setback to the scope of the study.
- Initial Cooperation Delay from Respondents: A particular limitation of this work came as a result of the respondent refusal to offer their cooperation at the initial time they were contacted. This contributed in making the success of this research study difficult.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).
1.10 Operational Definition of Terms
Professional:
It is a person formally certified by a professional body of belonging to a specific profession by virtue of having completed a required course of studies and or practice.
Ethics:
An ethics has to do with what my feelings tell me is right or wrong. An ethics has to do with my religious beliefs. Being ethical is doing what the law requires.
Accounting Practice:
An accounting practice is a routine manner in which the day-to-day financial activities of a business entity are gathered and recorded. A firm's accounting practice refers to the method by which its accounting policies are implemented and adhered to on a routine basis, typically by an accountant, auditor, or a team of accounting professionals
Financial Reporting Quality:
The accuracy with which a company's reported financials reflect its operating performance and their usefulness for forecasting future cash flows.
Financial Reporting:
It is the financial results of an organization that are released to the public. This reporting is a key function of the controller, who may be assisted by the investor relations officer if an organization is publicly held. It also refers to the communication of financial information, like financial statements, to the financial statement users, like investors and creditors.
