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. The interviews were conducted. Source of information were primary and secondary. Presentation and analysis of data were designed to present and analyze the research result. The result of data collected were presented in a table form and the results were analyzed under the table after the presentations possible findings of the study were that some financial statement contained in financial reports influence investment remarkable in banks. 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

1.0 INTORDUCTION

1.1 BACKGROUND OF THE STUDY

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

Financial reports in the banking industry are of 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 to 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 reports are to communicate economic measurement of 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.

1.2 STATEMENT OF PROBLEMS

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.

1.3 OBJECTIVE OF THE STUDY

Those companies in the banking industry have had to face the anerous task of presenting a credible and generally acceptable financial statement in their annual reports, to various people to whom they own such obligations.

The specific objective of this study is to:

- Examine the impact of financial reporting on bank performance.

Other objectives are:

- Find out whether financial reports are prepared to fight inflation in the economy.

- To ascertain whether or not management financial ineptitude is usually disclosed to shareholders while preparing financial reports.

1.4 RESEARCH QUESTION

The researcher formulated the following research question:

- What are the impact of financial reporting on bank performance.

- Is financial reports prepared to fight inflation in the economy?

- Does the management of union bank disclose the content of the financial report to their shareholders?

- To what extent does financial reporting affect the profitability of the bank?

1.5 SIGNIFICANCE OF THE STUDY

Banking industry is a very important sector of the economy. This is because banks can determine the direction of growth or development of the economy through the financial service rendered by banks. The financial services which includes, finds mobilization, safekeeping and custodianship, funds transfer, foreign exchange transactions, equipment leasing, extension of loans ad advances, investment in securities, bill discounting etc.

At the end of this study, we shall have been able t establish:

1. Whether or not the financial reports affects investment in the banking industry.

2. Whether or not the annual financial report currently reflect the inflationary effects.

3. Whether or not banks flow rigid accounting practices.

The importance of this research is not to discuss the determination of performance, but to establish a relationship between financial reporting and performance so that potential investors in the banking industry may clearly define their stance.

1.6 SCOPE AND LIMITATION OF THE STUDY

The objective of this study is to examine the impact of financial reporting on banks performance, however it will be restricted to investigations carried out on union Bank of Nigeria Plc. In Enugu. To enable the researcher have a broad view, the study will not be based on one branch. A study of some selected branches of union banks plc. Was also carried out.

Never the less the following among others are the numerous constraints, which are envisaged:

Literature: The scarcity of related books and journals will no doubt affect the quality of this research.

Time: Time constraint was a problem which the researcher faced during the period of the research work. As a study, the researcher was writing the project and preparing for her examinations.

Finance: The problems of inadequate finance cannot be over emphasized; this is because the paltry sum that was given to me by my parent could not go far in this research.

Again the cost of materials and transportation to banks could not help matters, I have to run around to scout for materials.

Responses rate: In this study, the information to be analyzed was limited to those who would respond voluntarily to the questionnaire.

Cooperation: To carrying out this types of work, one cannot rule out the possibility of a non-challant attitude from officers and employees of the bank who may feel that they will be leaking the secrets of the banks by allowing me access to such information, which I require.

1.7 DEFINITION FO TERMS

Auditing: The activity carried on by the auditor when he verifies or examines accountability information determines the accuracy and reliability of accounting statement and reports and then express his opinion.

Attest: To assume responsibility of the fairness and dependability of financial statements.

Bankrupt: Inability of a person to meet his liabilities as they mature or who is unable to pay his debts in fill and whose estate is administered and distributed for the benefit of his creditors.

Fraud: A criminal deception, a dishonest trick. Misrepresentation by a person to be untrue or made with reckless indifference as to whether the fact is true with the intention of deceiving the other party and with the result that the other party is injured.

Financial Statement: This covers balance sheets, income statement or profit and loss accounts notes and other statements and explanatory materials.

Going Concern: Continuing in operation for the foreseeable future with the assumption that the enterprise has neither the intention not the necessity f liquidation or curtailing materially the scale of its operations.

True and Fair View: The opinion of an auditor which despise compliance with generally accepted accounted principles and full and fair disclosure of facts.