The purpose of the study is to examine the impact of financial reporting on bank performance. It is also to find out whether financial reports are prepared to reflect inflation on the economy and finally to find out whether management’s financial ineptitude is usually disclosed to owners while presenting financial reports. Data for the study was sourced from two main sources which include Primary and Secondary sources of data Collection. Primary data: questionnaires and oral interviews were used to collect information from the respondents. Secondary data: journals, and other relevant materials relating to the area of my investigation will be review. Extensive literature review was carried out on the direct literature and indirect literature on books, journals and past works. The research instrument used in this study includes oral interview and questionnaire. The questionnaire is structural as to contain both close and open ended question. Simple tables and percentages were used in treatment of data.The annual reports do not reflect inflationary effects in the country to day. Again nature with the assumption that different users of the reports have different information needs. Accordingly the following conclusion were made; although investors and performance evaluation analysis relied on financial statement in their decision and appraisal the reliability of financial reports especially during inflation cannot be assured. It was recommended that the bank should adopt the current east accounting basis for its financial reporting to ensure credibility and reliability of information by the various users.

TABLE OF CONTENTS

Title Page … … … … … … … … i

Approval Page … … … … … … … … ii

Dedication … … … … … … … … iii

Acknowledgment … … … … … iv

Proposal … … … … … … … … v

Abstract … … … … … … … vi

Table of contents … … … … … viii

CHAPTER ONE

1.0 INTRODUCTION

1.1 Background of the study 1

1.2 Statement of problems 4

1.3 Objective of the study 6

1.4 Research Question 7

1.5 Significance the study 7

1.6 Scope and limitations of the study 9

1.7 Definition of terms 11

CHAPTER TWO

2.0 Review of Related Literature

2.1 Introduction 13

2.2 Background of union Banks of Nigeria Plc 14

2.3 Need for financial reports 18

2.4 Composition of banks financial report 19

2.4.1 The Chairman’s report 20

2.4.2 The Directors report 20

2.4.3 The Auditors report 22

2.4.4 The financial statement 25

2.5 Various uses of financial reports and

information needs of such users. 32

2.5.1 Shareholders 32

2.5.2 Long-term creditors 33

2.5.3 Short-term creditors 35

2.5.4 Tax authorities and Government 37

2.5.5 Employees and trade Unions 37

2.5.6 The management 37

2.5.7 Analysts / Advisers 41

2.6 Financial Reporting by Banks 42

2.6.1 Introduction 42

2.6.2 The prudential Guidelines 42

2.7 Performance Evaluation in banks 46

2.7.1 Efficiency and profitability 46

2.7.2 Potential and Actual Growth 48

2.7.3 Loans and Advances. 49

CHAPTER THREE

3.0 Research Design and methodology

3.1 Research Design 51

3.2 Area of the study 52

3.3 Population of the study 52

3.4 Sample method 53

3.5 Research Instrument 55

3.6 Validity and Reliability of Research

Instrument 55

3.7 Sources of Data 56

CHAPTER FOUR

4.0 Presentation and analysis of data

4.1 Presentation of Result 58

4.2 Analysis of result 61

CHAPTER FIVE

5.0 Summary of Finding, Conclusion and Recommendation

5.1 Summary of Findings 77

5.2 Conclusion 79

5.3 Recommendation 80

Bibliography 82

Appendixes 84

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

As Nigeria progresses in her vision to become one of the top 20 economic in the world by the year 2020, one prevailing issue that remains on the front flame is how to build investors confidence in the national economy through ethical accounting and auditing standard that enhance transparent financial reporting.

According to the International Accounting Standards Board (IASB, 2008:40,) timeliness of financial reports is the “availability of information needed by decision makers for useful decision making before it loses its capacity to influence decisions.” In emerging economies, the provision of timely information in corporate reports assumes greater importance since other nonfinancial statement sources such as media releases, news conferences and financial analysts forecasts are not well developed and the regulatory bodies are not as effective as in Western developed countries (Ahmed, 2003).

In Nigeria, the need for high quality and timely financial information has become particularly imperative due to the increasing exposure of Nigerian business organizations to international capital markets. Thus, the business organizations are being obliged to satisfy the information demands of foreign investors and to provide them with more timely information in annual financial reports.

A farmer who plants crops expects results. Similarly a student who sits for examination expects result. The same is also true of an investor. For the farmer, the result mighty be communicated to him in the from of a bumper harvest. A result sheet or a report card would usually sulfuric for a student. However, in the case of an investor, then result is communicated through the financial reports.

Financial reports are by law to be prepared by every limited liability company. These limited liability companies abound in virtually all sector of the economy.

Every company shall cause accounting records to be kept. The accounting records shall be sufficient to show and explain the transitions of the company and shall be such as to disclose with reasonable accuracy, at the any time the financial position of the company.

In the banking industry, financial reports are od great interest to the general public because the banks directly or indirectly interact with people.

This public interest has caused companies (including banks) to accept social as well as economic. Financial and legal responsibilities and has created a consequence, a growing need for the communication of information to account of the results which are of considerable interest to a wide range of individuals and organisations.

So, it become very imperative for reliable information to be circulated t interests parties which can enable them to acquire an essential knowledge of the way in which companies particularly the banks are performing in relation to the public interest. This fact is further educated by the recommendations of the working set up in Britain by the accounting standard committee in October 1974 under the chairmanship of Derek Booth man which took a study of the scope and aim of published financial statement. The committee recommended that:

“The fundamental objective so corporate report are to communicate economic measurement of an information about the resource and performance of the reporting entity useful to those having reasonable rights to such information”.

It is not an over statement when one says that the banking industry in the fulcrum on which the national economy rotates. This mammoth impact upon a country economy therefore makes it a public affair ie everybody in the country has a right to know what such organisations are doing, more so all information, necessary to explain the organisation activities fully should be provided in the annual reports.

One of the most significant aspects of the information system of business enterprises in an economy is that which deals with the communication of financial data, especially in describing business profitability and financial position. This information is important because it attempts to portray the economic resources of the enterprises and the financial results, which those resources achieved by its management when those resources have been put to use. It attempts to reveals how effective management has been in resources utilization as well as the financial reward available to compensate for risk taken by various suppliers of capital.

1.2 Statement Of Problems

The banking supervision department (BSD) of the CBN has since 1990 noted that it is the examiner task to prevent bank failures by identifying bank problem at an early stage to allow for intervention and/or corrective action before the situation get out of hard (CBN 1990). In going about this task, bank examiners carry out appraisals of the quality of a bank assets. To this end, the CBM issued a circular where it addressed requirements for asset classification and disclosure, provisioning interest accruals and off balance sheet engagements.

The genuineness of financial reports has attracted diverse opinions from different quarters; such opinions can come from the general public, tax authorities, shareholders, creditors with long to short term interest financial analysis and potential investors.

They argue that the financial reports do not usually give an accurate data about the activities of such business concerns, for example, the idea of stating assets at their historical costs do not favour most investors as they argue that inflation is not usually taken care of, though the real value of such assets might have been eroded.

Again, since the financial reports are prepared by management’s, the shareholders and other argue that there would usually be some elements of bias on the part of management in the disclose of management’s financial ineptitude.

But in any case the management claims that some inherent problems would usually affect the accuracy of such reports. It is therefore the intention of this researcher to delve into this matter to enable him establish a relationship between financial reporting and performance evaluation in a bank.