• Introduction

1.1    Background of the study

The accounting profession has received a global recognition and attention because of the role it plays in the world’s economy. The financial report given about any unit economy is base on accounting producers and practices. Both the fiscal and monetary policies of all nations are interpreted, implemented and reported upon through generally accepted accounting principles, procedures and practices. A global recognition of accounting practices connotes a general acceptance.

With effect from April 1, 2001, the International Accounting Standards were replaced with International Financial Reporting Standards. This is a reminder to name change in 1973 from Generally Accepted Accounting Principles (GAAP) to IAS’s which became IFRS in 2001. The name changed however, in the bane will be expected in future.

Each nation is expected to parade world class Professional Accounts, Authors, Finance Managers, Consultants, etc, who are familiar with the international accounting standards. This will not be possible without coming together of various accountancy bodies in the world with the sole intention of developing accounting standard for implementation among the nation’s of the world.

The Generally Accepted Accounting Principles (GAAP) which were popular prior to the introduction of International Accounting Standards had undergone several reviews undertaken by these world accounting bodies. This review brought about the International Accounting Standards which has received the world-wide recognition and acceptance.

Corporate organizations have the responsibility to comprehensively prepare and publish their audited financial report for investors and other users. Investment decision modes the commitment of current funds into long term projects for future benefit, as such financial information is important to the success of these investment opportunities Williams (2012), view financial information  as a result of business operations expressed in monetary terms. The notion of financial information largely implies those aspect encapsulated in the financial statements of an organization which may be used to ascertain the financial position of such organizations investment decision making. financial information relating to a business organization to enhance informed investment decision making.


1.2   Statement of the Problem

Financial statement apart from stating the financial position of an organization, ponds other information such as the value added, changes in equity if any and cash flows of the enterprise within a defined period of time to which it relates to flows of the enterprise within a defined period of time to which it relates.

Unfortunately, business cannot grow reasonably under a crude business practice as most business men and investors in our society are yet to understand the need of financial statement. Probably this is one of the reasons why some businesses are operating without even a book – keeper not to talk of an accountant.

The implementation of IFRS would reduce information irregularity and strengthens the communication link between all stakeholders. More so, the problem of high cost of consultancy services, since most of the businesses are small or medium term in size, it becomes hard for them, judging their capital base to rely on the services of the consultancy firms for their financial statements. The implication of this is that business decision grow. Therefore, this study seeks to examine the effect of financial statement on investment decisions making by shareholder of banks in Nigeria.


1.3   Objectives of the Study

                The specific objectives of this study include the following:

  • To examine financial statements as a tool for evaluating performance
  • To examine financial statement as a tool for investment decision
  • To examine the components of financial statements.
  • To examine the effect of IFRS on financial statements
  • To examine the benefits of IFRS and GAAP.


1.4   Research Questions

  • What are the tools for evaluating performance through financial statements?
  • What are the importance of financial statements for investment decision?
  • What are the components of financial statements?
  • What are the effect of IFRS on financial statements?
  • What are the benefits of IFRS and GAAP?


1.5   Significance of the Study:

This project report will provide typical information to government stakeholders, companies, dealers in stock exchange, financials institution, non financial institution, preparers of financial statement and users of financial statement in their effort to be updated within the international financial Reporting standards.

Finally, it will serve as useful guide lines to researchers, especially students who may be interested in further research in this area.


1.6   Scope and Limitations of the Study

Although the project concerns the IFRS and FDI in Nigeria. It however treats the case of Nigeria stock Exchange for the period 2005 – 2014.

Being an examination material at NIS level it’s volume is restricted to about 45-50 pages.

Moreover, a  very limited time is allowed, financial constraint, poor attitude of some personnel towards the provision of information have combined to restrict the effort of the researcher.


1.7   Organization of the Study

Chapter one present an over view of the study, it highlights the background of the study, statement of the problem, Objective of the study, research questions, Significance of the study, Scope and Limitation of the study, Organization of the study and definition of terms.

Chapter two highlight with the review of related literature. In this chapter an attempt is made to review the works of renewed scholars and author. This chapter is based on the theoretical frame work of this research project.

Chapter three stresses on research methodology. This chapter attempts to reveal the process and tools used in carrying out this research project and also assesses the validity of the study.

Chapter four emphasizes on data presentation, analysis and interpretation.

While chapter five, summarizes the findings, conclusion and suggests a suitable recommendations for the study.


1.8   Definition of Terms