CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The hall mark of a profession is its commitment to the public service. The commitment can be classified into three. Firstly, there must be satisfaction of the society being served, secondly there must be professional pride invite cra and thirdly the profession should be accorded recognition be fond its national boarders. If we go down into memory, we discover that the need for better accounting principles and standards is a world wide phenomenon, for instance, Noel Hyndman and Robert kink (1989:20) said that one of the main reasons for the dearth of new standards and revisions of same is the fact that the accounting standard committee (ASC) like other standard setting bodies now begin to investigate accounting topics which are extremely controversial. Invariably, most of the new standards involve significant adjustments to both the profit and loss account and the valuation of assets and liabilities in the balance sheet. Again, Noel Hyndman and Robert kink (1989:42-44) on then part saw from every practical objective level, most countries have disconvered lack of clear statement of the aims and purpose of financial reporting as the major, short coming in the standard setting processes. According to Hyndman and kink, and citing germany as an example, “financial statement are considered as one of the most important vehicles for communicating with people who have financial interest in business enterprises”. The art of accounting in this circumstances unlike the (former) is to provide a reliable and relevant information to the interested parties. Explaining his own reaction on the global eect of clear statement of the aims and purposes called, “in the united states for example, the stock market crashes of 1929 and 1969 which was blamed on financial report by companies first triggered the establishment of accounting standard in that country”. He went further to say that in the U.K, like Nigeria the establishment of accounting standard committee (ASC) by the six professional bodies were ignited by lack of uniform Nigerian situation was made worse by the Nigerian enterprises promotions decree which attempted to transfer ownership of companies to Nigeria”.
Foreigners exploited the lack of uniform accounting procedure in valuing their equity in corporations affected by the decree. Practicing accountant is faced to go down memory lane once more, he may admit that the problem emanated from their involvement of those principles and standards that date back to 600 B.C., when accounting as a practice came into being. Ordinarily, he may resolve that all it takes to improve on the principles is a fough body of accounting standards. But could these forestall the disasters in the accounting world most especially in our country? Today, the disaster is becoming more real than apparent in Nigeria with the introduction of the secondary foreign exchange market (SFEM), the recent open market operation (OMD) and foreign exchange market (FEM). According to Okpechi 91990:5) this system has brought in its wake a lot of pressures on management of companies to show profits in the fact of rapidly dwindling revenues. Accounts are most likely going to be massaged and manipulated to show favourable result. Once more, it is in this regard that accounting standards of measurement and reporting and the need for more to be more responsive to developed principles assume greater importance. If members of the profession feel that the present principles and standards have not altogether done much good, shall helplessly ching to them or find something that would be benefical to helping to achieve consistency between standard. Aer all December 20th century dictionary (1985:1022 AND 1261) pointed out the three major qualities of all principles and standard, it defined principles as “consistent regulation of behaviour accord go moral law” and standards as accepted authorities statement of adequacy required. According to Oxford English Dictionary second edition volume xii (1991:499) principles is defined as a “general law or rule adopted or professed as a guide to action, a settled ground or basis of conduct or action, especially one consciously recognized and followed and standards as a definite level of excellence, attainment, wealth or the lay or a definite degree of any quality, viewed as a prescribed object of endeavor or as a measure if what is adequate for some purpose. Form the foregoing, one may deduce that principles or standard is consistency applied if it provides adequate treatment for items in question. The adequacy assume its acceptability and the circle continue here lies our problem. The primary aim of this project, therefore is to find something we could expect would lead to a cutting back of alternative treatments in a longer term. In the short come closer to which could be regarded as our yearning principles or philosophy. Put simple a better account standard evolved to solve our immediate problems. This standard is also expected to fit into the economic like of particular place in question.