CHAPTER ONE

INTRODUCTION
1.1 Background of the Study

It is a widely acceptable concept that accounting principles, policies, methods, techniques and

stems govern the preparation process of the financial statement of any entity. For those transactions

and occurrences not specifically covered by an official statement account ants must exercise

professional judgement in determining the most reliable treatment that is compatible with usually

accepted accounting principles. Therefore, in order to provide a formidable and widely acceptable

template for financial reportin g, the accounting ethics of the professional managers of such

documents need to be curtailed. (Ikoh 2013). Hornby (2010) describes ethics as the moral values

governing human behaviour. The similarity is the measure of morally acceptable conduct in both

definitions. According to Salaudeen, Ibikunle and Chima (2015), it is therefore essential that the

information provided by the accountants and auditors be meaningfully effective, reliable, realistic

and unbiased. In view of recent happenings in the corporate world, there seems to be no

significant relationship between accounting ethics and the quality of financial reporting (Salaudeen

et al., 2015). According to Ezeani et al, (2012), the objectives of financial reporting are to provide

information to assist users in assessing the reporting entity’s financial and service performance,

financial position and cash flows, assessing the reporting Compliance with the laws, regulations,

common law and contractual provisions, as these relate to the assessment of the reporting entity’s

financial and service performance, financial position and cash flows and making decisions about

providing resources to or doing business with the reporting entity. To buttress this, Ogbonna and

Appah (2011) argued that corrupt company operations have acquired roots, s o it is essential that

accountants who are saddled with the responsibility of preparing financial re ports fully comply

with ethical accounting standards codes in order to generate precise, timely, efficient, thorough,

relevant and genuine financial reports. Suffice it to say that financial reporting is the fulcrum of the

1
art of decision making. Various organisation stakeholders need financial reporting to evaluate such

organization's efficiency, profitability, viability, and advancement. To this end, an accountant is

liable for the results of his moral choices for his one life as well as for the lives of

other people. The quality of financial reporting indicates a limit in which an entity's financial

reports, economic status and functions, measured over time, are honestly presented (Talebnia,

Salehi & Jabbarzade, 2011). Business practices, environments, and culture are known to possess the

capability, in varying degrees, to affect the value of and hence, Confidence in the system of

financial reporting (Gois, 2014).

The report of study carried out by Ogbonna and Ebimobowei,(2011) on the accountant's ethical

compliance with the quality of financial reporting and performance of quoted businesses in Nigeria

indicates that the accountant's compliance has a positive and significant impact on the quality of

financial reporting and organizational performance. As a result, society places a high level of trust in

the financial reports prepared and audited by professional accountants because it is thought that a

good deal of professional ethics and codes of behavi or have been taken into account in the

preparation and audit of financial statements (Adeyeye, Adeyemi and Otusanya, 2010). In other

words, accounting ethics is expected to impact the quality of financial report's.

1.2 Statement of the Problem

Accountants from time to time are confronted with ethical dilemmas (Babayanju, et al, 2017).

Accountants are enticed to choose between right and wrong in the course of their operations. The

claim to professionalism of the accountants is based on their commitment to ethical principles and

the will that they will not allow their public interest obligations to mix with private interests

(Babajanyu, et al, 2017). Joseph and Dike (2014) corroborates that the failures of certain

organisations in the corporate scene can be traced to the failure of accountants of such organisations

to comply with codes of behavior prescribed by end-users in the content of financial reports and
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their skepticism. Business failure and scandal cases have led to greater scrutiny of accountants '

financial reports. Aguolu (2006) postulated that these failures of corporate entities were due to the

non- compliance of accountants with the codes of conduct shown not only in the financial statements

contents but also in their reliability by end users. Consequently, appropriate care must be taken in

the presentation of these financial statements. In recent times, several ethical issues have been

discussed, ranging from conflict of interest, deali ngs with insiders, objectivity, gifts acceptance, etc.

Scholars believe that all these ethical issues influence the quality of the financial statements

Joseph and Dike (2014). The amended and republished Corporate Governance Code (2011)

provided for the composition of an ethics committee in an organisation where the committee is

responsible for deliberating on ethical issues and upholding the organization's ethical norms. This

has not actually yielded the correct outcome as designed as some of the scandals over the previous

century have been traced back to ethical issues where most of the time management and auditors

have compromised integrity for private and selfish gain to the organization's detriment (Gois, 2014).

Thus, the gap between theory and practice required critical evaluation of organizations ' ethical

issues and how they influence the quality of financial reporting. Consequently, this project's aim is

to investigate whether or not ; accounting ethics has effect on the quality of financial reporting.

1.3 Objectives of the Study

This study seeks to achieve the following objectives

i. To examine the integrity of an accounting ethical principle

ii. To examine the Professional independence of financial reporting quality

1.4 Research Question

i. Integrity as an accounting ethical principle does not have significant effect on the quality

of financial reporting in Nigeria deposit money banks

ii. Professional independence does not have significant effect on the quality of financial

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 reporting in Nigeria deposit money banks

1.5 Research Hypothesis

𝐻01 – Integrity as an accounting ethical principle does not have significant effect on the quality

of financial reporting in Nigeria deposit money banks

𝐻02 - Professional independence does not have significant effect on the quality of financial

reporting in Nigeria deposit money banks

1.6 Justification of the Study

Scholars such as Ezeani et al, (2012); Joseph & Dike (2014); Ogbonna and Appah (2011);

Babayanju et al, (2017); Enofe et al, (2015); Nwagboso (2018) and Festus& Temitope (2016) have

conducted studies targeted to assess the impact of accounting ethics on the quality of financial

reports of Nigerian firms. Virtually all of these studies focused on the financial sector and financial

report of firms thereby excluding quality financial reporting as a whole on its own.

This study will be of immense benefits in multiple ways. First, it will educate stakeholders from

different organisations about how to uphold their stipulated ethical principles to prevent business

failures and corporate scandals. Second, it will encourage accountants to adhere strictly to

accounting ethics codes in order to have certain aspects of reliability prepared and provided by them

in the financial reporting template. Third, the research through its results will help organizations '

stakeholders make essential investment, finance, and dividend choices to support their organization's

general corporate performance.

1.7 Scope of the Study

This study examines the effect of accounting ethics on quality financial reporting in the Nigerian

deposit money banks. It is limited to Nigeria. Therefore, the scope of this study is limited to data

from employees of the selected nine (9) deposit money banks with international authorization. The

research work was so limited because of the limited availability of data and time. It also covers some
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of the publications of the Institute of Chartered Accountant of Nigeria (ICAN).

Consequently, several reviews, on issues relating to the effect of accounting ethics on quality

financial reporting in Nigeria to include text books, industrial relation, management, social sciences,

dissertations from academicians on related issues, Newspaper edits, journal etc would be consulted.

1.8 Operational Definition of Terms

Ethics: This refers to a set of moral principles, especially ones relating or to or affirming a

specified group, field or form of conduct.

Accounting Ethics: This is primarily a field of applied ethics and is part of business ethics and

human ethics. Accounting ethics studies moral values and judgments as they apply to accountancy.

Financial Report: Financial report (or statements) is a formal record of the financial activities and

position of a business, person or other entity. Relevant financial reports such as balance sheet,

income and expenditure statement, statement of retained earnings and cash flow statements, must

be presented in a structured manner which must be easily comprehensible to the end users.

Objectivity: Objectivity entails that financial report must be independent and supported with

unbiased evidence.

Disclosure: Disclosure refers to the additional information attached to an organization‟s financial

report, usually as explanation for activities which have significantly influenced such organization‟s

financial results.

Integrity: Integrity implies that financial report must be accurate, reliable and truthful.

Professional Independence: This refers to freedom of professional accountants from control or

influence of another party or stakeholder. It implies that professional accountants must be given the

free-hand to prepare financial reports devoid of internal and external interference

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 CHAPTER TWO
LITERATURE REVIEW
In this chapter, various existing literatures on the subject matter such as works already done by

earlier researchers, relevant journals, magazines, newspaper and authors of various books would

be reviewed. Also, this chapter is divided into three sections. Section 2.0 is the preamble. Section

highlights the conceptual review and section 2.2 highlights the theoretical framework of the

study where relevant theories in the research area will be succinctly highlighted and explained as

well as conceptual issues on effect of accounting ethics on quality financial reporting in Nigeria

deposit money banks. Section 2.3 reviews the empirical studies while

2.1 Conceptual Review

The Nature and Scope of Ethics

Ethics are the moral principles that an individual uses to govern his or her conduct, according to

Ogbonna and Appah (2011). It is the private criteria that distinguishes an individual from right or

incorrect. From Ogbonna's point of view, when we talk about ethics and ethical values, we mean

our concern about things that we think, say, and/or practice may not necessarily violate the

organization's rules or infringe the land's law or constitute an outright crime or felony, but that

border on our sense of morality, our sense of right and wrong. It is concerned with problems

such as conflict of interest, dealings of insiders, compromising integrity, objectivity,

independence, confidentiality, disclosure of official secrets and destruction of official documents

for financial gain and other similar acts that are contrary to moral values and ethical norms.

Nwagboso (2008) claims that ethics or morality as matters of good and evil, right and wrong, and

supports the fact that "we live in a wilderness of ethics today”.

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He thinks that all individuals have ethics in ferment and chaos. Hayes, Schilder, Dassen, and

Wallage (1999) claim that ethics is a set of moral principles, behavioral guidelines, or values.

Ethics apply when an individual has to decide on different moral values from various

alternatives. For society to operate in an orderly way, ethical behavior is essential. The need for

ethics in society is sufficiently essential that it is impossible to incorporate integrity, allegiance

and pursuit of excellence into law. They further indicated that the following ethical principles

integrate the features most individuals associate with ethical conduct; sincerity, integrity,

promise of maintaining, allegiance, fairness, caring for others, respect for others, pursuit of

excellence and responsibility. Ethical behaviour is necessary for society to function in an orderly

manner.

The Concept of Accounting Ethics

The rapid development of human society and social relationships which is complex, necessitates

the constant flux of fiduciary relationship management that is ethically acceptable. One

professional development efforts needed in response to these changing conditions evolve in the

form of professional codes of conduct and standards. Thus, increasing social demands in the

range of accounting responsibilities in the complex web of social contracts makes the

establishment of standard practice and professional behaviour expected of the accountant,

inevitable. This explains why accounting services are provided under the supervision of a

professional association, (Saghafi, Rahmani, & Rabie, 2010). For instance, according to principle

of AICPA code 3, Members should accept the obligation to act in a way that will serve the public

interest, honor the public trust, and demonstrate a commitment to professionalism. These

professional responsibilities, in order of priority, include: responsibility for society,

responsibility for client, responsibility for other members of the profession, and responsibility for

self. In other words, professional person should accept that after joining the profession, the

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interests of society take precedence over and above client‟s and personal interests in the

discharge of his professional services. Non-accountants may find it difficult to draw the link(s)

between Pacioli‟s work on double entry bookkeeping and accounting ethics. However, it is this

very work on double entry bookkeeping that forms the (epistemological) base of accounting

ethics. The basic idea about double entry bookkeeping is extremely simple but has profound

implications for accounting ethics: every debit entry must have a credit entry. In an event

where this is not the case, it indicates creative accounting, which is another term for fraud. While

the value of double entry bookkeeping in detecting creative accounting is widely acknowledged,

Brown (1962, citing Foster, 1836) captures the role of human agency in accounting ethics –

through the ability to embrace moral values and pass moral judgements – by submitting, the

fundamental principles of double entry are as dependable in their application to every species of

accounts as their operation is extensive; in practice, however, they are exposed to all the moral

and mental deficiencies of the accountant:

They are neither exempt from the defects of ignorance – the errors of indolence – or the practice

of fraud – and frequent and careful investigations on the part of the proprietor himself are

scarcely sufficient to render him secure from such evils.

The professional accountant is expected to provide true and accurate picture of the performance

of an entity even in the face of conflicting interest involving his personal interest. Such display

of professional discipline, which is the hallmark of professional objectivity, no doubt, engenders

reliability, continued trust and public confidence in the accounting profession, which should

further reinforce the intellectual and practical adherence to the professional standards of conduct.

More so, it is believed that such professional discipline also enhances the desirable quality of the

final products of the accounting profession. Such desirable qualities as faithful representation of

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 facts, relevance and reliability of facts so presented, understandability of facts and timeliness of

facts, are enhanced when the public accountant is seen to be so professionally disciplined in

conduct

Financial Reporting Quality

Financial reporting's primary objective is to provide high-quality financial reporting data on

economic institutions, mainly financial in nature, that is helpful for economic decision making

(FASB, 1999; IASB, 2008). It is essential to provide high-quality financial reporting data because it

will favorably impact capital suppliers and other stakeholders in making investment, credit and

comparable resource allocation choices that improve general business effectiveness (IASB, 2006;

IASB, 2008). The quality of financial reporting indicates a limit that honestly presents a company's

financial reports, its economic status, and features that are measured over time (Talebnia, Salehi,

Jabbarzade & Kangarluei, 2011). Truthfulness and confidence in the financial reporting scheme rely

on much more than individual actions and choices or advanced "processes" for the scheme as a

whole (Enderle, 2006). Companies in the power, accounting and banking sectors and licensed

government accountants ' professional organizations and investment managers and researchers

have influenced the quality and trust in the economic sector in differing degrees, affect the quality

of and confidence in the financial reporting systems. Truthfulness and confidence in the financial

reporting system can not therefore be a matter of private or institutional ethics alone (Brenkert,

2004). It is more essential to conduct ethical accounting than auditing because the accounting system

prepares auditing financial statements (Mahdavikhou & Khotanlou, 2011). Accountants have

responsibilities to shareholders, creditors, staff, vendors, government, accounting profession, and the

general public.

In other words, their obligations extend beyond their immediate client. Decisions taken on

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accountants ' information can have a significant impact on the life of any or all of these stakeholders.

Ethical behavior is therefore an essential and expected trait (Carroll, 2005). As a result, an

accountant not only meets the moral consequences of their choices in life, but the lives of other

people as well, (Catacutan, 2006). Professional ethics is important to accountants and those who rely

on information provided by accountants because ethical behavior entails taking the moral point of

view. Thus, internalizing and developing professional ethics in accounting profession lead to

promoting the quality of financial reporting, (Ball, Robin & Wu, 2003).

Business Ethics and Corporate Governance

Accounting ethics as business ethics and how they impact corporate governance is another core

theme in the literature. Ethics and corporate governance are interrelated. The primacy of accounting

ethics in business ethics within the broader framework of corporate governance is underscored by

the emerging and evolving challenge of handling ethics-related issues in the complex contemporary

workplace often resulting in what is described as a “reactive mode” of addressing ethical issues in

business settings (Fourie, 2012). Reactive mode is the starting point in managing ethics. Often,

where business ethics are at play within the broader framework of corporate governance, accounting

ethics are also at play either by commission or omission.

Within the South African corporate governance environment, a sharp focus has been made on

accounting ethics – as a form of business ethics – and with the introduction of proper leadership,

social responsibility, and sustainable and environmental developments came a King report. The King

report was initially introduced by 1994 and was approved and supported by the late former president

Nelson Mandela. As a highly valued and ethical president, one would tell that that is how he grew in

popularity, and the King report gained momentum, which resulted in King II and III which were

updated in 2002 and 2009 respectively (Institute of Directors in Southern Africa (IoDSA), 2015) and

finally King IV.

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King IV was published by IoDSA, which is still the governing body even today. It describes the

shifting power relations and openness to constructive engagement. According to the report, business

enterprises should not only take into account the interests of shareholders assumed to be in touch

with societal realities but also the “„legitimate interests and expectations of stakeholders other than

shareholders… In this report, business enterprises are viewed as corporate citizens that do not

simply have the responsibility of building „sustainable business‟, but should do business

„ethically‟ by considering „the short- and long- term impacts of strategy on the economy, society

and the natural environment‟ by taking into account „the company‟s impact on internal and external

stakeholders.

The report therefore recommends that businesses establish mechanisms and processes that support

stakeholders in constructive engagement with the company and communicate in a„transparent and

effective‟ manner in order to build and maintain their „trust and confidence‟”. At the heart of the

mechanisms mentioned in the report is “reporting” as a managerial function in businesses. Because

businesses exist for the purpose of making a profit from invested capital, reporting inherently

involves expense and income accounts as well as statements of profit and loss accounts, as the case

may be. The core of these accounts is accounting procedures and protocols. The contention in this

case is that at the heart of business ethics and their concomitant reporting imperatives, especially as

outlined by various King reports in South Africa, are accounting ethics.

This analysis finds resonance with a view advanced by Buys, et al., (2012) when they proffer

that accounting professionals have the potential to influence the flow of events, as whatever

accounting professionals say is regarded as having substance. Accountants and auditors play a very

important role with their opinion, which is regarded as final or strong to influence decisions in

business. However, accounting ethics, as business ethics in corporate governance, seem to have

inherited the social dilemma associated with the emergence of a new paradigm in economics and

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split views on whether to demand higher ethics or wider regulation.

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This leads to the following question being asked: does more, extra ample, broad set of rules, which

meet previous „preventions‟ or parts elaborated in (Smith & Smith, 2003) Smith‟s „unseen hand‟, a

suitable cautious reaction to the existing economic and social advances, which have resulted from a

high desire for the chase of profits?

Additional fundamental inquiry is whether the recent majority form of democratic political systems

is talented enough to generate a corporate governance atmosphere in terms of „relation goods‟ and

positive, undetectable assets for the common good. It is the considered view of the current analysis

that whichever way this dilemma plays out, accounting ethics as a core requirement of reporting

processes and procedures of corporates will remain a critical aspect of business ethics within the

context of corporate governance. In totality, the fundamental dilemma is to find a new model with a

high level of ethics in economic relations, or keep extending strong regulatory measures

(Ducháčková & Daňhel, 2013).

Accounting standards and benchmarks

Accounting standards and benchmarks are derived from the deontological/formalism base of

accounting ethics. It is important to note that inherent in the discourse or language of accounting

ethics are accounting standards, and benchmarks are the notion of what an „ideal‟ accounting

function should encompass. In this sense, Buys (2009) lists these as being relevant, reliable and

comparable. With regard to being relevant, Buys (2009) submits that appropriate accounting

material would provoke and stimulate commercial choices, whereas accounting that is more reliable

would not be biased and, as a result, be easily verifiable. Comparability on its part means

“stakeholders can compare relevant information across businesses” (Buys, 2009, p. 503).

Summarising these, Buys observes, in reality, the data we obtain from accounting material should

give a reliable opinion with reasonable facts beyond doubt and allow for testing and authenticating

in order to be acceptable. Suffice towards submitting that these are not possible were it not for
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accounting standards and benchmarks.

Accounting Ethics as Professional Ethics

Buys, et al., (2012) make worthy observations on accounting ethics as professional ethics. In this

regard, they opine that the commitment to be a registered professional accountant requires that a

professional behaves in a good manner all the time and stay away from temptation of doing wrong.

In registering to be a professional accountant, a day- to-day image has to be maintained in order to

exercise a broader vision in others to trust a professional accountant. Codes of conduct are to

provide a framework for ethical behaviour, and it is important for an accountant to operate within

this framework. Although an accountant‟s interpretation of this framework is often formed

through personal experience and training, there are certain principles that the ethical

accountant‟ should strive for, which include:

 Avoid small ethical failures. Although it may initially seem unimportant, there is a

possibility of exploitation later by unprincipled individuals.

 Focus on the long-term reputation. Accountants should try and ignore short-term

pressures and focus on their long-term reputation.

 Be prepared to face personal consequences. The ethical accountant may face two choices:

to let go of ethical standards and obtain certain benefits or to be ignored when

promotional opportunities arise.

Finally, should the ethical harms not be reasonably resolved, professional accountants have no other

option but to resign their position within an organisation or appointment from a client (Buys, et al.,

2012). It is deducible from this erudite exposition of accounting ethics that as an aspect of applied

ethics, accounting ethics demand the highest level of moral probity

Accounting Ethics in Business Education and Training

Can ethics generally and accounting ethics specifically be taught? This quintessential question has

found its way into accounting ethics literature. Several scholars have addressed this issue. The
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discussion in this section samples some of these contributions.

At a general level, Celuch and Dill (2011) observe that it is significant for business facilitators and

corporate coaches to fully understand the landscape of ethical decisions so that an enriched syllabus

and training can be advanced to develop ideal ethical decision-making. Hence, fully

understanding individual- level ethical behaviour from a business perspective is an ongoing

imperative.

2.2 Theoretical Review

Epistemological interrogation, which ultimately leads to formulation and advancement of theory, is

a core theme in accounting ethics literature. Some theories were used as a basis for this study;

compliance theory, accounting theory, theory of rights, agency theory, institutional theory and

ethical theory. The most relevant theory for this study is the Ethical Theory.

Compliance Theory

On its part, the basis of compliance theory is shaped by, the study of norms and observed manner in

relation to those rules. Ethical standards adopted by professional associations [of which accounting

ethics are an exemplar] are often dedicated applications of general moral standards (Petty, 2011).

Accounting Theory

Hendriksen (1985) specifies that accounting theory is based on a logical mentality in form of

delineated and extensive ideologies which offers a universal referencing frame from which practices

in accounting may be gauged upon, and more so, provides a guide for new practices and

procedure in development. To be conclusively solving real-world accounting issues, accountants

should have enough practical experience facilitated by their theoretical knowledge. The widely

accepted principles of accounting, conventions, used customs, procedures, doctrines, and postulates

have accounting theories (Coetsee, 2010). These theories shall be applicable in this study in order to

depict the influences of accounting knowledge and skills on financial quality reports as developed
15
by the accountant. Accounting theory has developed over the years by observation, assessments,

scrutiny and scanning, and explanations on daily accounting practices (Waweru, Ntui, &Mangena,

2011). The daily accounting practices have been performed through successful usage of generally

accepted and established theories and principles. Because of the changes within any country‟s

socioeconomic structure, accounting patterns of practices could also change. In the event of any

change within the accounting pattern, necessary modulations and modifications are needed on the

pertinent theories. An accountant cannot contemplate of practicing without adequately getting

equipped with the theoretical knowledge. Notwithstanding, that the theories of accounting could

also help accountant professionals with solving real world practicing challenges that could arise in

their professionalism (Coetsee, 2010). As such, knowledge of accounting, the integrity of the

accountant and professional independence depicted by the accountant are important in influencing

the quality of financial accounting reports.

2.3 Empirical Review

Different scholars in accounting parlance and social sciences have highlighted a variety of

accounting ethics and previous studies led the expectation that accountants need to buckle up in the

areas of ethics and quality financial reporting.

Mahdi and Mohsen (2011) carried out a study on the impact of professional ethics on financial

reporting quality in Iran they employed a 24 item questionnaire and worked with a sample of 205

Iranian companies. The result of their findings showed that professional ethics have a significant

impact on the quality of financial reporting. Masoud and Mahbude (2013) investigated the impact

of professional ethics on financial reporting quality and found that developing professional ethics in

accounting will help promote financial reporting quality. Tae and Jinhan (2011) examined the effect

of business ethics on financial reporting quality using Korea firms. They found out that companies

with a higher level of ethical commitment are engaged in less earnings management,

16
report earnings more conservatively, and predict future cash flows more accurately than those

with a lower level of ethical commitment. We also find that corporate commitment to business

ethics has perpetuating effects on future financial reporting quality.

Ogbonna and Appah (2011) investigated the effect of ethics on financial reporting quality in

Nigeria using a sample of 123 accountants. The study found out that ethical compliance by the

accountant positively and significantly affects the quality financial reports. Flugrath, Bennie &

Chen (2007) conducted a study on ethics and financial reporting quality using a sample of 112

professional accountants using primary data. The results indicate that the presence of ethics has

apositive impact on the quality of the judgement made by professional accountants. Berrone,

suroca, Tribo (2009) carried out a study using 515 companies using OLS regression analysis.

Their study reveals that a strong corporate ethical identity was positively related to high levels of

stakeholder satisfaction. In turn stakeholder satisfaction had a positive influence on the financial

performance of the firm. The findings established that banks with more objective accountants

and auditors provided high quality financial reporting. An extensive involvement of internal

auditors in reviewing internal financial reports boosted the quality financial reporting. Stewart

range of fiscal reporting in the Spanish banking industry. The aim of the study was to assess the

connection between a firm‟s accountants‟ objectivity and the quality of its financial reporting.

The study relied on the data collected from the Spanish banks‟ internal audit directors. The

findings established that banks with more objective accountants and auditors provided high

quality financial reporting. An extensive involvement of internal auditors in reviewing internal

financial reports boosted the quality financial reporting. Stewart Ogbonna and Ebimobowei

(2012) investigated how Ethical Accounting Standards impact on Nigerian Banks‟ Financial

Reports. To attain the study‟s objectives, both secondary and primary material formed as sources

of the research data. These secondary sources included journals, textbooks, and unpublished

17
thesis.

The primary data was gathered using a well-structured questionnaire with four sections

composed of 67 questions given to a sample size of eight banks and systematically gathered

among twenty-four Nigerian banks. The information gathered on the questionnaires was then

analyzed using models of econometric like Augmented Dickey-Fuller, diagnostic tests, Granger

Causality, and ordinary least square. The findings showed that standards of ethical accounting

were extensively linked with the financial reports of Nigerian banks.

Implication of the Review to the Current Study

The review of empirical literature presented here has indicated that while several studies have

been carried out on impact of accounting effects on financial report, however little research to

our understanding has been done to explore certain issues surrounding this study especially as it

relates accounting ethics on quality financial reporting in Nigeria. The review has also

necessitated the criticism of theories used in other studies to enable a better understanding.

Theory of Rights

Rand (1967) devised the theory of rights which depicts that human beings have an inherent and

absolute worth which should be respected. Meaning that good decision making should respect

other people‟s rights. Equally, a decision will be wrong if it violates the rights of another person.

Generally, the underlined rights are segmented in two categories, that is; - Contractual or legal

rights (these are rights that are shaped by social agreement), or natural rights (they independently

exist from any legal structure). The natural rights are often referred to as constitutional or human

rights. Within natural rights, critical to the functioning of accounting is the right to truthfulness

(Zeghal & Mhedhbi, 2016). All persons who use financial statements are obligated to the right of

accessing accurate and truthful financial information that will facilitate their decision making for

alternative investment strategies. The right provides a moral obligation for professional
18
accountants and reporting entity to avail and issue, fair and truthful financial statements

(Neidermeyer et al., 2012). On the other end, contractual and legal rights are vital for an

accountant-employer or client relationship. With the contractual relationships employers and

clients have contractual rights to demand for competent and professional accountants‟ financial

reporting services. Correspondingly, accountants are legally obliged to execute their duties best

as per their abilities and within their professional constraints. The accountant should therefore

ensure that they have the requisite independence, expertise and integrity to perform their duties

and deliver quality financial reports to the stakeholders (Copeland, 2015). This theory was

therefore applied in the study to provide an insight on how objectivity, integrity and professional

independence of the accountant can have an effect on the quality of financial reports.

Agency Theory

Agency theory recognizes the agency relationship where one party, the principle allots some

tasks to another party referred as the agent. The agency theory was conceived in 1976 by

Meckling and Jensen. The two posited that agency costs occur when there is separation between

controls and the management. The Agency theory suggests that an accountant‟s appointment

should be based on the needs of both the management and third parties. Adams (2014) asserts

that the agency relationship may have a number of demerits associated with self-interest and

opportunism of the agent where he may fail to perform in the best interest of the principle. There

are various dimensions in relation to this where the agent misuses the power for financial or

other advantages or he may not take appropriate risks in accordance to the principal‟s interest.

The cause of this can be the fact that agent perception of risks is not appropriate while the

principal may have a differing attitude towards risk (Adams, 2014). Another issue that arises in

the relationship is the information asymmetry whereby both parties have access to different

levels of information. For financial institutions as well as the issue of corporate control, the
19
agency theory perceives corporate governance especially financial reporting as being an

important monitoring device to minimize the problem that may arise from the principal-agency

relationship. The cost of monitoring and disciplining those people who try to prevent abuse and

misuse of power have been referred to as agency cost. In relation to financial institutions, much

of agency theory is set to separate the ownership and control as described in the work of Nagy

and Cenker (2012). In this context, the principals are stakeholders and the agents are managers.

Ethical Theory

Another strand of this interrogation is an attempt to define ethical theory – another theoretical

base of accounting ethics. Ethical theory derives from “ethics”, which “denote the abstract and

theoretical reflection on moral judgements. Ethics asks for the ground on which moral statements

are made. Why do we think something is good, right or acceptable” (Stahl, 2012, p. 641). Stahl

(2012) further documents, prominent ethical theories comprise consequentialism and (Kantian)

deontology. Utilitarianism, the most prominent consequentialist ethical theory pursues to

compare the aggregated utility and disutility of each alternative action. The ethical decision is the

one that maximizes overall utility. In essence, this approach focuses exclusively on the outcomes

or consequences of decisions, which is the reason it is usually called „consequentialist‟. Kantian

deontology, on the other hand, takes a fundamentally different approach and evaluates the ethical

quality of a decision according to the intention of the agent. Famously linked to the so-called

categorical imperative, the ethical evaluation of a maxim depends on whether it can be

universalized or imagined as a universal law. An alternative formulation stipulates that a maxim

is ethically suitable if it treats humans as ends in themselves, not simply the means. The

approach is called deontological (from Greek deon, „obligation, and duty‟) because it

concentrates on the duty-bound intention of the agent with little regard for consequences.

20
 CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction

This chapter discusses the method and procedures employed in carrying out the research. It also

discusses the research design, population of the study, sampling technique and sample size, data

collection method. The methods employed for data analysis which include Econometric View

(E-view), regression analysis and the model specification were also discussed.

3.1 Research Design

The study adopted the survey research design which seek to elicit the objective opinion of the

respondents on ethics and financial reporting. To achieve the aims and objectives of the study the

design is structured in such a way that it is also based on the research question of the study. This

design is a proper, objective, orderly process in which numerical information are used to get data

from the desired population.

3.2 Population of the Study

This research seeks to investigate the effect of accounting ethics on the quality of financial

reporting in Nigeria using deposit money banks. As at December 2018 there are 21 deposit

money banks, 9 with International Authorization, 10 with National Authorization, 2 with

Regional Authorization. Hence the population of this study are the employees of the selected

deposit money banks which are Guaranty Trust Bank Plc, Access Bank Plc and Zenith Bank Plc.

21
3.3 Sampling Technique and Sample Size

A comprehensive questionnaire was designed to capture the necessary information from three (3)

out of nine (9) deposit money banks with International Authorization. However, because of time

and other constraints, a sample of 20 employees was selected each from the total population of

the three (3) deposit money banks out of nine (9) deposit money banks with International

Authorization to make inferences which represents 33% of total number of deposit money banks

licensed with International Authorization. According to Eze juolu and Ogwo (1990), a minimum

of 10% of the population is considered appropriate for sampling.

3.4 Data Collection Instrument and Validation

As stated by Ogunboye (2012), there are two different methods of data collection which are the

primary and secondary method of data collection. The primary method of data collection

includes the use of questionnaire and personal interview, while the secondary method of data

collection emphasizes the use of data collected by others for the records or previous work, this

involves obtaining data from journals, bulletins, and other publications like annual reports,

Nigeria stock exchange official reports etc. For the purpose of this research work, primary

method of data collection was adopted in the course of data collection for this study. Therefore,

questionnaire was adopted as the data collection instrument for the collection of primary data for

the study.

The questionnaire was designed in two separate sections: A and B. The questions in section A is

to collect relevant information about the background of the target respondents (their Biodata).

Section B contains relevant questions meant to solicit the desired response on various aspects of

leadership styles and workers performance. Also, it consists of opinions centered on the

22
remaining part of the stated research questions, with which one can assess the impact of

leadership styles on workers performance. The six-point response scale adopted was Likert Scale

Type which ranges from strongly agree to strongly disagree (strongly agree, agree, fairly agree,

fairly disagree, strongly disagree, disagree).

3.5 Validity and Reliability of the Instrument

The said questionnaire was subjected to pass through a two-phase pre-test process in order to

enhance its validity and reliability. In the first pre-test stage, the questionnaire was presented

to the Supervisor for constructive criticisms and necessary corrections. The elicited responses

was also appropriately tested with Test-Retest Reliability

3.6 Method of Data Analysis

The collected data was analyzed using descriptive and inferential statistics. The descriptive

statistics involves the use of Frequency table and percentages while the inferential statistics

involves the use of Ordinary Least Square Regression (Panel data analysis). Also, data from the

completed questionnaire was checked for consistency. The items are grouped based on the

responses of the respondents. Cross tabulation was done on the demographics and the impact of

leadership style on workers performance was determined by Econometric View (E-view)

through Regression Analysis.

23
3.7 Model Specification

The model specification used in this study is based on the description of the relationship between

the dependent and independent variables of the research work. The economic model used in the

study is given as:

FR= α0 + β1X1 + β2X2 + β3X3 + ℇ i

Where: FR= Financial Reporting

α0 = Constant

β1 = Regression coefficient related to the accounting ethics

X1= Objectivity

X2= Integrity

X3= Professional Independence

ℇ i= Error term

24
 CHAPTER FOUR

DATA ANALYSIS AND PRESENTATION OF RESULT

4.0 Introduction

This study made use of data sourced from administered questionnaire and coded in secondary

data format. This section provides an in-depth description on the empirical study of the impact of

Accountants‟ Objectivity (OBJ), Integrity (INT) and Professional Independence (PROF_IND)

on Financial Reporting of selected Deposit Money Banks in Nigeria. An attempt is also made to

accept or reject the validity of the hypotheses stated earlier in this study and to make generalized

opinion on the relationship.The data gathered were then subjected to various econometric tests

using EVIEWS Version 7.1.SUMMARY STATISTICS OF VARIABLES TABLE

4.1: Summary Statistics of the Variable of Study

FINANCIAL_REPORTING OBJ INT PROF_IND

Mean 55.33333 23.30000 25.80000 25.05000

Median 53.50000 21.50000 22.50000 25.00000

Maximum 74.00000 28.00000 30.00000 29.00000

Minimum 32.00000 18.00000 19.00000 18.00000

Std. Dev. 11.29672 3.093459 2.880678 2.806922

Skewness -0.420980 -0.252755 -0.518927 -0.761072

Kurtosis 2.372432 1.727487 2.669694 3.030737

Jarque-Bera 2.756846 4.687076 2.965610 5.794668

Probability 0.251976 0.095987 0.227000 0.055170

Sum 3320.000 1398.000 1548.000 1503.000

Sum Sq. Dev. 7529.333 564.6000 489.6000 464.8500

Source: Author‟s Computation, 2019

25
The above table shows the summary statistics of the dependent and independents variables used

for the study. The distribution used a total 60 observations and 4 variables spanning from

questionnaires distributed to Selected Deposit Money Banks in Nigeria. The mean distribution

shows a total of 55.33333 for Financial Reporting, 23.30000 for Objectivity, 25.80000 for

Integrity and 25.05000 for Professional Independence. Since the means of these variables were

all greater than their respective median value, this illustrates that they are all skewed to the right.

A good rule of thumb for a normal distribution is that approximately 68% of the values fall

within one standard deviation of the mean, 95% of the values fall within two standard deviations,

and 99.7% of the values fall within three standard deviations. Hence, Objectivity, Integrity and

Professional Independence showed a greater spread in the data.

Presentation of Demographics

Table 4.2: Gender Distribution of Respondents

Frequency Percent Valid Percent Cumulative

Percent

Male 35 58.3 58.3 58.3

Valid Female 25 41.7 41.7 100.0

Total 60 100.0 100.0

Source: Author‟s Computation, 2019

Table 4.2 above shows sex distribution of respondents. 58.3% of the respondents were Male

while 41.7% were females. Hence, finding reveals that majority of the respondents were males.

26
Table 4.3: Age Distribution of Respondents

Frequency Percent Valid Percent Cumulative

Percent

Below 25 Years 15 25.0 25.0 25.0

Between 26 and 35 Years 32 53.3 53.3 78.3

Valid Between 36 and 45 Years 10 16.7 16.7 95.0

46 and above 3 5.0 5.0 100.0

Total 60 100.0 100.0

Source: Author‟s Computation, 2019

On age of the respondents, 25% of the respondents were below 25 years of age, 53.3% between
26 and 35 years, 16.7% between 36 and 45 years while 5% were 46 and above. Therefore,
majority of respondents for this study were between the ages of 26 and 35 years.
Table 4.4: Education Distribution of Respondents

Frequenc Percent Valid Cumulative

y Percen Percent

WAEC/SSCE/GCE/N 3 5.0 5.0 5.0

ECO

OND/NCE 3 5.0 5.0 10.0

Valid
HND/BSC 30 50.0 50.0 60.0

MSC/MBA/PHD 24 40.0 40.0 100.0

Total 60 100.0 100.0

27
Source: Author‟s Computation, 2019

With respect to highest education qualifications of the respondents, findings from above table

shows that 50% had university/polytechnic education, followed by 40% who had

Masters/MBA/PhD, 5% had OND/NCE while 5% also had had first degree as their highest level

of education. Hence, majority of the respondents had University/Polytechnic education.

Table 4.5: Distribution of Respondents’ Years of Experience

Frequency Percent Valid Percent Cumulative

Percent

1-5 Years 30 50.0 50.0 50.0

6-10 Years 18 30.0 30.0 80.0

Valid 11-15 Years 9 15.0 15.0 95.0

15 and above 3 5.0 5.0 100.0

Total 60 100.0 100.0

Source: Author‟s Computation, 2019
Table above depicts working experience of the respondents. However, finding shows that 50% of

the respondents had been working in the bank for 1 – 5 Years, 30% had 6 – 10 years of

experience, 15% had 11 – 15 years while 5% had 15 and above years of experience with the

banks. Thus, majority of the respondents for this study had 1 – 5 years of experience.

TEST OF HYPOTHESIS

𝐻_01 - Objectivity as an accounting ethical principle does not have significant effect on the

quality financial reporting in Nigeria deposit money banks.

Table 4.6: Test of Hypothesis on Objectivity and quality Financial Reporting

Dependent Variable: FINANCIAL_REPORTING

Method: Least Squares

28
Date: 07/23/19 Time: 15:45

Sample: 60

Included observations: 60

Variable Coefficient Std. Error t-Statistic Prob.

ETHICS 1.752386 0.452959 3.868750 0.0003

C 18.29958 9.661951 1.893983 0.0632

R-squared 0.205123 Mean dependent var 55.33333

Adjusted R-squared 0.191418 S.D. dependent var 11.29672

S.E. of regression 10.15814 Akaike info criterion 7.507194

Sum squared resid 5984.897 Schwarz criterion 7.577005

Log likelihood -223.2158 Hannan-Quinn criter. 7.534501

F-statistic 14.96722 Durbin-Watson stat 1.804990

Prob(F-statistic) 0.000280

Source: Author‟s Computation, 2019

Individual analysis of Ordinary Least Square (OLS) regression is presented in the table above.

The result of the analysis above shows the relationship between ethics captured by objectivity

and financial reporting quality. The result of the analysis shows a R-square of 0.21 indicating

that 21 percent of systematic variation in financial report objectivity has been explained by the

explanatory variable. The result further reveals that objectivity had a positive and significant

relationship with financial information. The prob (F-stat) is 0.0003 indicating that the model is

significant at 5%. Since the rule of thumb of auto correlation says that Durbin Watson coefficient

should be approximately 2, hence the Durbin Watson value of 1.80 indicates the absence of auto

correlation.

29
Therefore, we would reject the null hypothesis and upholds the alternate hypothesis by

concluding that, objectivity as an accounting ethical principle have a positive and significant

effect on the quality financial reporting in Nigeria deposit money banks.

𝐻_ (02)– Integrity as an accounting ethical principle does not have significant effect on the

quality of financial reporting in Nigeria deposit money banks

Table 4.7: Test of Hypothesis on Integrity and Quality Financial Reporting

Dependent Variable: FINANCIAL_REPORTING

Method: Least Squares

Date: 07/23/19 Time: 15:46

Sample: 60

Included observations: 60

Variable Coefficient Std. Error t-Statistic Prob.

INTEGRITY 1.227533 0.489047 2.510049 0.0149

C 23.66299 12.69452 1.864031 0.0674

R-squared 0.097983 Mean dependent var 55.33333

Adjusted R-squared 0.082431 S.D. dependent var 11.29672

S.E. of regression 10.82111 Akaike info criterion 7.633639

Sum squared resid 6791.586 Schwarz criterion 7.703450

Log likelihood -227.0092 Hannan-Quinn criter. 7.660946

F-statistic 6.300345 Durbin-Watson stat 1.752176

Prob(F-statistic) 0.014884

Source: Author‟s Computation, 2019

Table 4.7 above shows the relationship between integrity in the accounting field and quality
30
financial reporting quality. A glance at the analysis shows a R-square of 0.097 indicating that 9

percent of systematic variation in financial report integrity has been explained by the explanatory

variable. The result further reveals that integrity had a positive and significant relationship with

financial information. The prob (F-stat) is 0.014 indicating that the model is significant at 5%.

Since the rule of thumb of auto correlation says that Durbin Watson coefficient should be

approximately 2, hence the Durbin Watson value of 1.75 indicates the absence of auto

correlation.

Hence, the alternate hypothesis is accepted. From the findings, Integrity as an accounting ethical

principle have significant effect on the quality of financial reporting in Nigeria deposit money

banks.

𝐻_ (03)- Professional independence does not have significant effect on the quality

of financial reporting in Nigeria deposit money banks.

Table 4.8: Test of Hypothesis on Professional Independence and Quality Financial

Reporting

Dependent Variable: FINANCIAL_REPORTING

Method: Least Squares

Date: 07/23/19 Time: 15:47

Sample: 60

Included observations: 60

Variable Coefficient Std. Error t-Statistic Prob.

PROFESSIONALIT

Y 1.914596 0.464826 4.118953 0.0001

31
 C 7.372701 11.71555 0.629309 0.5316

R-squared 0.226314 Mean dependent var 55.33333

Adjusted R-squared 0.212974 S.D. dependent var 11.29672

S.E. of regression 10.02182 Akaike info criterion 7.480172

Sum squared resid 5825.343 Schwarz criterion 7.549984

Log likelihood -222.4052 Hannan-Quinn criter. 7.507479

F-statistic 16.96577 Durbin-Watson stat 1.571651

Prob(F-statistic) 0.000122

Source: Author‟s Computation, 2019

A glossary glance at the Table 4.8 above displays the relationship between professional

independence and quality financial reporting quality. From the analysis, R-square of 0.22 indicating

that 22 percent of systematic variation in financial report professional independence has been

explained by the explanatory variable. Also, the analysis further shows that professional

independence had a positive and significant relationship with quality financial information. The prob

(F-stat) is 0.0001 indicating that the model is significant at 5%.

Since the rule of thumb of auto correlation says that Durbin Watson coefficient should be

approximately 2, hence the Durbin Watson value of 1.75 indicates the absence of auto correlation.

Therefore, the alternate hypothesis is accepted. From the findings, professional independence has

significant effect on the quality of financial reporting in Nigeria deposit.

32
MULTIPLE REGRESSION
Table 4.9 Least Square (Multiple Regression)

Dependent Variable: FINANCIAL_REPORTING

Method: Least Squares

Date: 07/23/19 Time: 15:11

Sample: 60

Included observations: 60

Variable Coefficient Std. Error t-Statistic Prob.

INTEGRITY 0.236444 0.675836 0.0349854 0.07278

OBJECTIVITY 0.510768 0.651218 0.0284328 0.04362

PROFESSIONALIT
0.208933 0.636860 0.0328067 0.00341
Y

C 86.96775 21.44660 4.055084 0.00002

R-squared 0.936343 Mean dependent var 75.93333

Adjusted R-squared 0.926353 S.D. dependent var 12.97438

S.E. of regression 13.20810 Akaike info criterion 8.063878

Sum squared resid 9769.422 Schwarz criterion 8.203501

Log likelihood 237.9164 Hannan-Quinn criter. 8.118493

F-statistic 0.310132 Durbin-Watson stat 1.523874

Prob(F-statistic) 0.817961

Source: Author‟s Computation, 2019

33
FR= α0 + β1X1 + β2X2 + β3X3 + ℇ i---------Regression Model

or

FR= α0 + β1OBJ + β2INT + β3PROD_IND + ℇ i----------Regression Model

Where: FR= Financial Reporting

α0 = Constant

β1, β2, β3= Regression coefficient related to the accounting ethics

X1 or OBJ= Objectivity

X2 or INT= Integrity

X3 or PROF_IND= Professional Independence

ℇ i= Error term

Table 4.10: Regression result Summary-Model 1

Variable Coefficient Standard error T-statistic Probability

Constant 86.96775 21.44660 4.055084 0.00002

OBJ 0.510768 0.651218 0.0284328 0.04362

INT 0.236444 0.675836 0.0349854 0.07278

PROF_IND 0.208933 0.636860 0.0328067 0.00341

Source: Author‟s Computation, 2019

A glossary glance at the Table 4.9 and Table 4.10 above displays the Multiple Regression

Analysis of the dependent (Financial Reporting), FR, Objectivity (OBJ), Integrity (INT) and

Professional Independence (Prof_Ind). From the analysis, R-square of 0.93 indicating that 93

percent of systematic variation in quality financial reporting has been explained by the

explanatory variable. Also, the analysis further shows that all the independent variables

34
(Objectivity, Integrity and Professional Independence) have a positive and significant

relationship with quality financial information.

Since the rule of thumb of auto correlation says that Durbin Watson coefficient should be

approximately 2, hence the Durbin Watson value of 1.51 indicates the absence of auto

correlation.

Therefore, the alternate hypothesis is accepted. From the findings, the independent variables

have significant effect on the quality of financial reporting in Nigeria deposit money banks.

The regression analysis can be summarized as follows:

FR= 86.96775 + 0.510768OBJ + 0.236444INT + 0.208933PROD_IND + ℇ i

From the above, the degree of coefficient of Objectivity is the highest and this portrays high

importance respondents placed on it. This is followed by Integrity and then consequently

Professional Independence. All these variables are positive and significant individually and

should be considered while preparing financial report.

4.5 Discussion of Findings

The results of the research study show a high percentage of the population agreed that

accounting ethics is paramount to quality financial report amongst the selected deposit money

banks in Nigeria. Given the fact that about 90% of the respondents were of the opinion that

objectivity, integrity, and professional independence were significant in the model. These

conclusions infer that improvement in skill set and competence of accountants is expected to lead

to improvement in the quality of financial reports. The result is also in agreement with the

institutional theory as noted by Mihret and Woldeyohanes (2011), that an institution needs

effective systems, processes and competent human resources to perform its functions effectively.

With high competence, commitment and dedication of accountants during the preparation of

35
financial report, the endpoint would always be high quality report. The result of this study also

conforms with the findings by Stewart and Subramaniam (2010) that having competent

employees in handling of accounting and finance is fundamental for their effective and efficient

operation. Financial reporting activities require knowledgeable staff with the appropriate

education, experience and professional qualification to perform a wide range of accounting tasks

audits required. Also, findings from the report imply that there is a strong positive relationship

between professional independence of accountants and high quality of financial reports. This

finding is in corroboration with the agency theory by Meckling and Jensen (1976). This theory

opines that when the auditors and accountants are independent, they are able to provide an

accurate account of transactions by the firm to the third parties interested in financial reporting

from the firm. Moreover, the findings support the assertion by Adams (2014) that to reduce

possibility of self-interest and opportunism by management, there needs to be independent

auditors and financial reporters. The study findings also support the findings by Al-Matari et al.

(2014) that independence of accounting team significantly and positively influence quality of

financial reports. This implied that as accounting team becomes more independent from the

influences of management, the efficiency of the output of accounting department improve. Study

results indicated that objectivity of accountants was positively and significantly associated with

quality of financial reports (β = 0.510; p < 0.05). which further confirmed the findings by Gras

et al. (2012) who conducted a study on the objectivity of accountants and the extend of fiscal

reporting in the Spanish banking industry. The findings from the study by Gras et al. (2012)

established that banks with more objective accountants and auditors provided high quality

financial reporting. Furthermore, the findings from the current study agree with the findings by

Yosep (2016) who explored the effect of accountant‟s objectivity on financial report‟s quality in

Indian publicly lusted commercial banks.

36
 CHAPTER FIVE

SUMMARY, RECOMMENDATIONS AND CONCLUSION

5.1 Summary

This research was conducted with a view to investigating the “effect of accounting ethics on the

quality of financial reporting in the Nigerian deposit money banks and the objectives of this

research include the following;

i. To examine the effect of objectivity on the quality of financial reporting in Nigeria

deposit money banks.

ii. To examine the effect of integrity on the quality of financial reporting in Nigeria

deposit money banks.

iii. To evaluate the effect of professional independence on the quality of financial reporting

in Nigeria deposit money banks.

60 questionnaires were shared to 3 different deposit money banks in Nigeria to get response from

their employees which include accountants, economist, etc. Other relevant materials were

gathered from other secondary sources. A model was adopted in this study and estimated through

Multiple regression Analysis (OLS)

The Multiple Regression Analysis was used to indicate the relationship between Financial

reporting, Objectivity, Integrity and Professional Independence as it relates to Nigeria deposit

money banks. The data gathered were then subjected to various econometric tests using

EVIEWS Version 7.1

37
The findings from the coefficient of Regression Analysis Model from the previous chapter shows

that all explanatory variables such as Accountants‟ Objectivity, Integrity and Professional

Independence were positive and significant. However, the level of significance differs.

Objectivity has the highest level of significance, followed by Integrity and Professional

Independence. Hence, the model was a true picture of the Nigerian deposit money banks.

The findings revealed Objectivity, Integrity and Professional Independence has a significant

impact on the quality financial reporting in selected deposit money banks in Nigeria. In Table

4.10, the intercept is 86.96775, this indicates that if all explanatory variables such as accountant

Objectivity, Integrity and Professional Independence were held constant, financial reporting

would stay at 86.98 all things being equal.

5.2 Conclusions

The analysis of the data showed that accounting ethics had a significant relationship with

financial reporting quality. The result is consistent with the study of Ogbonna & Appah (2011)

that ethics in the accounting profession is fundamental in the quality of financial reports of

organizations. Thus, ethical norms and codes as they relate to the accountancy profession need to

be enforced (regulation theory) in order to maintain the relevance of the accounting profession to

the society (social contract theory).

This study has formed empirical indication which advocates a positive relationship between

perceived professional independence of the reporting accountant and financial statement

understandability by the financial statement user. The inherent nature of man to pursue self-

interest is by itself, a justification for the existence of law, without which society is likely to

38
degenerate into self-destruction. In the same token, professional practice requires some measure

of ground rules to which the members of the profession are expected to comply with.

5.3 Recommendations

From the summary of the findings and conclusion above, this study provides the following

recommendations for policy makers, government agencies and appropriate authority for

improvement on Nigeria external debt. Suggestion to be considered the following:

i. Accounting bodies such as ICAN, ANAN, etc should provide regular trainings for

accountant to keep them abreast of the recent changes in the field. includes

ii. Firms should endeavor to improve upon their recruitment process in order to recruit men

and women with high level of ethical standing would be employed. Men with adequate

knowledge of financial statement should be employed at all levels of accounting areas.

iii. Corporate firms in should, as a matter of importance, launch autonomous department that

should enforce, ethics and compliance department to direct and monitor ethics

implementation in their day-to-day operations.

iv. Financial Reporting Council of Nigeria (FRCN) and other regulatory bodies should

intensify effort to compel firms to comply strictly to the financial reporting framework

issued by the International Financial Reporting Standards for better and more acceptable

financial reports.

v. The commercial banks should continually develop their accounting staff both internally

and sponsoring them for educational seminars or workshops. Risks in the banking sector

are evolving and the accounting employees need to have high competence in detecting

and preventing losses from fraud and other such risks.

39
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42