The Use Of Accountability Framework As An Alternative Approach For Corporate Social Responsibility Reporting And Disclosure Practices In Nigeria

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The Use Of Accountability Framework As An Alternative Approach For Corporate Social Responsibility Reporting And Disclosure Practices In Nigeria


Abstract


The study is an investigation to an alternative approach for corporate social responsibility reporting and disclosure practices by corporate entities in Nigeria with emphasis on the need to use an accountability frame work that will provide a wider disclosure of corporate information to a wider audience incorporating corporate social responsibility information. The study is an empirical survey that seeks to explore the views and perceptions of the accounting communities in relation to the objectives of the study. The population randomly selected for this study comprises of four groups that are directly involve in the practice of accounting. A questionnaire was design as the data collection instruments. Chi-square was used to test the hypothesis of the study that stated that there is no significant difference in the views of all the groups under investigation


Chapter One


Introduction

1.1 Background of the Study

Nigeria with an estimated population of over 180 million people is the largest market for goods and services in Africa. Its gross domestic product was U. $ 568.51 billion in 2014. There are 864902 companies registered with the corporate affairs companies registered with the corporate affairs commission. The Nigeria stock exchange has 209 listed companies with a combined market capitalization close at #9.851 trillion as at December 2015. (Asein, 2010), noted that despite this huge resources it is neither satisfying the need of the people nor increasing the growth of the economy.

A key policy strategy in repositioning the economy of Nigeria is the attraction of foreign direct investment (FDI) into the economy to provide investible fund for corporate entities. Foreign direct investment in Nigeria has been declining for the past decade primarily due to the perception of risk in Nigeria Obazee, (2010). The perception of Nigeria as a risky country for the flow of foreign direct investment can in part be attributable to the limitations and short comings noticed in the corporate reporting and disclosure practices by Nigerian companies this is owning to the fact that some of these companies cannot provide investors and other stakeholders with sufficient and reliable economic information that will enable the users of such information to understand the risk profiles inherent in such companies and to permit informed judgment and decisions.

Nowadays, business has become more global and indeed Nigeria is part of this globalization. The competitive and dynamic nature of Business environment has brought about pressure for more information disclosure to assist shareholders and others stakeholders in taking economic and other investment decisions. Asein (2009) to the end concluded that the global adoption of a single set of financial reporting standard will enhance comparability and create an enabling environment for all investors to compare effectively investment opportunities across the global market.

It has been observed and frequently asserted by scholars of accounting history that the practice of accounting and corporate reporting and disclosure requirement of corporate entities have been closely interlocked with the social, political and economic situation of a country. However, there are two very clear elements in the conventional basis of legitimating for current accounting practices. Role of law and the concept of generally accepted accounting principles (GAAP). The legal basis for reporting and disclosure practices in Nigeria is derived from the relevant laws and legislation notably the Companies and Allied Matters Act (CAMA, 1990) and secondly from the recent adopted international financial reporting standards in 2012 which is to be observed in the preparation and presentation of financial statement by corporate entities in the country.

However, the relevance and adequacy of such standard (i.e. IFRSs) to Nigeria face with social and economic problems in the real life. Given that accounting systems have the potential for supporting change in a society and are never neutral, it seems therefore that there is an urgent need for recognition of a greater social role of accounting in Nigeria. Indeed, there is an urgent need for an approach to corporate reporting and disclosure practices that will be of greater use than the current one which is based upon the companies and allied matters act (CAMA 1990) and the IFRS. There is a need for an approach that can contribute to the understanding, debate and hence, proffers solution to the social and economic problems that Nigeria experiences.

Therefore, the main question underlying this research study is: what are the alternative approaches that can provide an appropriate basis in terms of relevance and sufficiency for corporate reporting and disclosure practices in Nigeria.


1.2 Statement of the Problem

The problem area that spurred the interest in researching into this topic are Specifically attributable to the limitations and shortcomings noticed in the current framework of corporate reporting and disclosure practices of Nigerian companies which previous research has proved to be deficient. According to Wallance, 1988; Adeyeyemi, 2006; Nzekwe, 2009; Okike, 2000; and Ofoegbu & Okoye, 2006. They all found Nigerian reporting to be deficient. According to Ali et al (2004), the government regulatory bodies and the accounting profession of developing nations suffer from structural weakness and often take a lenient attitude toward default of accounting regulations.

The mandatory and voluntary disclosure of financial and non financial information in the corporate annual reports have attracted a considerable attention their by necessitating the need for an accountability framework as an alternative approach for corporate social responsibility reporting and disclosure practices for Nigerian listed companies that will provide a wider disclosure of corporate social responsibility information to a wider audience.


1.3 Objectives of the Study

This study has four principal objectives. First is to examine and evaluate the current framework of CRDPs in Nigeria (which is mainly based upon the companies and allied matters Acts and the recently adopted international financial reporting standards (IFRSs) in order to highlight the possible limitations and shortcomings of such a frame work.

The second objectives is to explore the views and perceptions amongst members of the accounting communities in Nigeria as to the basic features for the current CRDPs of Nigerian listed companies, the reasons for the adoption of IFRSs in Nigeria in terms of their relevance and sufficiency to the country, the disclosure of corporate social responsibility information and the notion of social responsibility and accountability.

The third objective is to establish a framework as a basis for alternative practices within which wider disclosure in terms of corporate social responsibility (CSR) information may be provided to a wider set of stakeholders.

The final objective is to outline a specific proposal for such an accountability framework as a basis for such practices.

The research objectives are guided by the following research question:

  1. What are the limitations and shortcoming of the current frame work in use?
  2. What is the alternative approach to the current corporate reporting and disclosure practices in Nigeria?
  3. How efficient will the alternative approach to corporate social responsibility reporting and disclosure be in terms of adequacy and sufficiency?
  4. What are the primary factors attributable to the overall levels of disclosure?
  5. Are there differences in the views and perceptions of preparers, auditors, academics in accounting field and official bodies concerned on corporate reporting and disclosure practices of Nigerian listed companies?

1.4 Research Hypothesis

  • H0: There is no significant difference in the views of the entire group under investigation.
  • H1: There is a significant difference in the views of the entire group under investigation.

1.5 Significant of the Study

Accurate, sufficient and reliable corporate reporting is a necessary tool for short and long term survival of any organization. the current corporate reporting and disclosure practices in the country that is characterized inefficiency on the part of the regulatory bodies and the insufficiencies of the generally accepted accounting principles has spurred interest into this studyand the economic and social problem confronting the country at this moment, and the country is facing at this moment, and the suggestion and recommendation of this study one can conclude that the study is of great importance to corporate reporting and disclosure practices of Nigeria companies in the following areas.

  1. It can be seen as an attempt to draw into the attention of the authority, and the professional bodies
    1. The limitations and shortcomings of the current approach to corporate reporting and disclosure practices in Nigeria in the light of the country’s economic, social and political environment.
    2. The importance of under disclosure in terms of corporate social responsibilities (CSR) information and an accountability framework as a basis for corporate and disclosure is weekly to be provided to a wider set of users.
  2. To the Knowledge of the researcher, it can be seen as unique in that it attempt to address the social role that accounting can play in the environment of Nigeria. It attempts to address the importance of wider disclosure in terms of corporate social responsibilities information in assisting the understanding enhancing debate and hence solution to the social, cultural and economic problem confronting the country and enhancing the principles and doctrines emphasized in the constitution of the country.
  3. It can be seen as significant since it tries to establish the need for an alternative framework as a basis for corporate reporting and disclosure practices in Nigeria within which wider disclosure in terms of CSR information may be provided to a more extensively suggesting that such a framework work the need for the adoption of (IFRSs). Stakeholders and
  4. The study will serve as a reference material for other researchers who may be researching into this field in the future.
  5. To the researcher, the study has contributed to his knowledge in terms of the notion behind corporate social responsibility and the need for an accountability frame work that will enable an organization to fully disclose necessary information about its corporate social responsibilities in its corporate report.
  6. It can be useful as a subject matter for comparative accounting.

1.6 Definition of Terms

i. Accountability:

The obligation of an individual or organization to account for its activities, accept responsibilities for them and to disclose the results in a transparent manner.

ii. Framework:

The basic structure of something, a set of ideas or facts that provide support for something

iii. Corporate Report:

Is an annual statement prepared and presented by a corporate entity such as statements of financial position, statement of cash flow, statement of profit or loss, directors report, sustainability report e.t.c

iv. Corporate social Responsibility:

Is a corposration initiative to assess and take responsibility for the company’s effects on the environmental and social wellbeing. It is a short-term cost that does not provides an immediate financial benefit to the company, but instead promotes positive social and environmental changes.

v. Practices:

The actual application or use of an idea, belief or method as opposed to theories relating to it.

vi. Approach:

A way of dealing with a situation or problem

vii. Alternative:

One of a numbers of possible choices or courses of action.

viii. Responsibility:

The state of having a duty to deal with something or having control over someone or ability to act independently and take decisions without authorization or state of being accountable.

ix. Social Accounting:

Is the process of measuring, monitoring and reporting to stake holders the social and environmental effects of an organization actions

x. GAAP:

Generally accepted accounting principles

xi. International Financial Reporting Standards:

Are standards issued by international Accounting Standard Board IASB.

xii. Report:

Is an account given of a particular matter, especially in the form of an official document after thorough investigation or consideration by an appointed person or body.

xiii. Disclosure:

Is the appearance of quantitative and/ or qualitative economic information relating to a business enterprise in the annual reports

xiv. Environment:

The surroundings or conditions in which a person or an organization operates which include physical, social, political and economic environment.


1.7 General Statement About The Research Approach

In order to explore the above research objectives, the research utilizes more than one type of method, namely a descriptive method. Theoretical and conceptual analysis: and empirical survey. A descriptive method is used to review, evaluate and examine the current framework practices in Nigeria: the method is used to review and examine the accounting and its environment, in which it operates in Nigeria, the nature and qualities of accounting practiced in Nigeria which research has proved to be deficient, and some alternative approach for improving accounting practices in Nigeria, the current framework of corporate reporting and disclosure practice in Nigeria.

A Theoretical and conceptual analysis is undertaken in order to examine and analyze the need for and to suggest an accountability framework as a basis for corporate reporting and disclosure practices in Nigeria within which wider disclosure of CSR information may be provided to wider set of audience.

An empirical survey is carried out for exploring views and perceptions as to:

  1. The perceived basic features of the current CRDPS of the Nigerian companies in terms of the intended purposes for the preparation of annual reports by these companies.
  2. The possibility of wider disclosure in terms of CSR reporting, as perhaps leading to source beneficial socio-economic effects, and the possibilities that legal requirements and accounting standards calling for wider disclosure might be feasible.
  3. The extent to which notions of social responsibility and accountability are acceptable since the essence of the empirical survey is to examine views and perceptions, the major element of the empirics is based on the questionnaire as an information gathering instrument.

1.8 Organization of the Rest of the Research

This study is presented in five (5) chapters. These chapters are organized in a sequential manner that will aid careful investigation and easy achievement of the objectives of the study.

Chapter one is a preview of the back ground of the study and the problem that necessitated the study. This lead to the outline of the objectives ,significance, research question and hypothesis within which sample size of accounting communities are drawn and finally operational definition of terms.

Chapter two presents the review of relevant literature concerning this study. Also theories about the dependent and independent variables were discussed. A discussion and analysis that attempt to establish the need for an accountability framework for CRDPs in Nigeria which includes: An examination and Analysis of CSR reporting in the Nigeria context; An examination of the theories, approaches and/or perspective which have been provided in the literature in order to identify the one will provide the most appropriate basis for a wider disclosure in term of CSR reporting suggested for Nigeria; An outline of a proposed accountability framework as a basis for CRDPs in Nigeria

Chapter three reveals the method of data collection, in relation to the research design , questionnaire, population and samples with emphasis on model specification, estimation validation and reliability of research instrumentation.

Chapter four under takes the data analysis of the respondent’s perceptions, and views and presents the empirical findings obtained from the data analysis accordingly, it includes:

  1. A description of the statistical techniques utilized in the data analysis
  2. Background information of the respondents to this survey.
  3. Analysis of perceptions of the intended purpose for annual report in Nigeria.
  4. An analysis of perception of the reasons for the adoption of IFRSs in Nigeria.
  5. An analysis of perceptions of the wider disclosure of CSR information
  6. An analysis of perceptions of social responsibility and accountability

Chapter five provides the summary; the findings and conclusion and recommendations of the research. In addition, the appendix provides details of the questionnaire, in the empirical survey and detailed summaries of the responses received.


Chapter Five


Summery, Conclution and Recommendation

5.1 Introduction

This Chapter summarizes the findings and conclusions shown in the preceding Chapters. The principal aim of the Chapter is to bring together and accentuate the primary thoughts related to the theme of the research. Accordingly, it is divided into four sections. The one which follows this short introduction provides a summary of the objectives of the research and the approach employed to achieve these objectives. The third section presents the findings and conclusions reached based upon the descriptive work, theoretical and conceptual analysis and empirical survey. The final section offers some of the recommendations based upon the research and the findings and conclusions that emerge.


5.2 Summary

This study had four principal objectives. The first was to examine the current framework of corporate reporting and disclosure practices in Nigeria, in the light of the country’s economic, social and political environment, in order to highlight possible limitations and shortcomings of such a framework. The second objective was to establish a framework as a basis for alternative practices within which wider disclosure in terms of corporate social responsibility information may be provided to a wider set of audiences, including government departments and agencies, employees, local communities, consumers and even society at large. The third principal objective of this study was to outline a specific proposal for such an accountability framework as a basis for corporate social responsibi1ity reporting and disclosure practices in Nigeria. The fourth principal objective was to explore the views and perceptions of the accounting community in Nigeria on the basic features of the current CRDPs of the Nigerian listed companies, the reasons for the adoption of the lFRSs in Nigeria and their relevance and sufficiency to the country, the disclosure of CSR information, leading perhaps to some socioeconomic effects and the notions of social responsibility and accountability.

In order to explore the above mentioned research objectives, more than one type of research method was utilized, namely: a descriptive method; a theoretical and conceptual analysis; and empirical survey. A descriptive style was used, firstly, to discuss accounting and its environment in Nigeria, the nature and qualities of accounting practices in Nigeria which research shows that it deficient in order to improve this system, alternative approach was suggested as a way of improving accounting practices in Nigeria through transfer of accounting tech nological know – how from advance countries to Nigeria; and through international convergence of accounting and the adoption of a uniform system of accounting. Secondly, a descriptive method was also used to review and examine and the current framework of corporate reporting and disclosure practices in Nigeria such as the Companies and Allied Matters Act (CAMA 1990), the Nigerian capital market which consist main of two principal regulatory bodies: the Securities and Exchange Commission and the Nigerian Stock Exchange responsible for monitoring the activities of this market. The federal Inland Revenue service is responsible for tax administration and the financial reporting council of Nigeria that was established to oversee the adoption of IFRSs in 2012.

A theoretical discussion was undertaken in order to examine and analyses the various theories relating to accountability and corporate social responsibilities of a firm such as the stakeholders theory, legitimacy theory, and accountability approach.

More so, a review of the environment of companies in Nigeria and its relationship with elements in the society was undertaking in order to examine the impact of these organization on the environment and to suggest possible ways through which organizations can minimized there impact on the environment. The concept of corporate social responsibility reporting in Nigerian context was discussed and the need for an accountability framework through which wider disclosure of corporate social responsibility information can be provided to a wider audience and the notion of corporate social responsibility and accountability were examined.

Finally, a model of a proposed accountability framework was presented with illustrations of how companies may be accountable.

An empirical work was carried out to explore views and perceptions of members of the accounting community in Nigeria (Chapters three and four) to examine:

  1. The perceived basic features of the current CRDPs in Nigeria terms of the intended purposes for the preparation of annual reports by Nigerian listed companies
  2. The perceived fundamental necessity for the adoption of the lFRSs in Nigeria, their validity, and possible willingness of Nigerians to adapt, supplement or change these standards.
  3. The possibility of wider disclosure that would incorporate CSR reporting, and thus whether legal requirements and accounting standards calling for wider disclosure might be feasible.
  4. The extent to which notions of corporate social responsibility and accountability are acceptable in the Nigerian context.

Accordingly, a personally delivered and collected questionnaire was chosen as the instrument of the empirical work. The questionnaire (see Appendix A) consists of Four Parts, except for the one delivered to official bodies which includes only three Parts. Part 1 which aimed to gather background information of the participants included five questions seeking to gather information on the participants’ educational qualification in accounting, place of education for the last qualification, professional qualification (if any) in accounting, present occupation and year of experience. It should be noted that this part was not included in the questionnaire intended for participants from official bodies (governmental and non- governmental) concerned with accounting in Jordan in order to avoid any possible embarrassment which may result in reducing the response rate.

Part 2 of the questionnaire was designed to examine the perceptions of participants on the basic features for the current CRDPs of the Nigerian listed companies in terms of the intended purposes for the preparation of annual reports by these companies.

Part three includes a question in which participants were provided with a list of the possible objectives for the preparation of annual reports of companies within the three major objectives of corporate reporting, namely, stewardship, decision usefulness and accountability objectives. They were asked to indicate, on a five-point scale, their assessment of the importance which most Jordanian shareholding companies assign to each of these objectives. Part 3 of the questionnaire elicited the views of participants on the fundamental necessity for the adoption of the lFRSs in Nigeria, their validity (in terms of their relevance and sufficiency to the environment of Nigeria), and whether or not Nigerians should be willing to adapt, supplement or change these standards. This Part incorporated two questions. The first contained a list of the possible reasons that prompted Nigeria to adopt the lFRSs. Participants were asked to indicate their assessment of the importance of each of the suggested reasons for the adoption of such standards in Nigeria. The second elicited opinions on statements about the relevance and sufficiency of the existing lFRSs to the Nigerian environment and some relevant suggestions to Nigeria. Participants were asked to indicate, on a five point scale, the degree of their agreement with each of these statements.

Part 4 of the questionnaire was designed with two purposes in mind. The first purpose was to determine the existence of a ‘demand for’, or at least, an ‘acceptance of’ the possibility that a wider disclosure in terms of CSR reporting, which might lead to some beneficial socioeconomic effects, and whether the introduction of legal requirements and accounting standards calling for wider disclosure might be feasible.

The second purpose was to elicit respondents’ views on the extent to which notions of corporate social responsibility and accountability are acceptable. Accordingly, this Part of the questionnaire includes eight questions:

The first question asked participants, after providing them with a list of reasons which may influence the Nigerian listed companies not to make CSR disclosure, to indicate their assessment of the level of importance of these reasons.

The second question asked participants, after providing them with a list of the possible methods for CSR disclosure, to indicate the extent of their agreement with each of these methods.

The third question asked participants, after providing them with a list of audiences who might be affected by the companies’ actions and policies, to indicate the extent of their agreement with the suggestion that Nigerian listed companies should accept responsibilities towards each of these audience.

The fourth question asked participants, after introducing views relating to possible motivation of acceptance of social responsibility, to indicate the extent of their agreement with each of these views with reference to Nigerian listed companies.

The fifth question asked participants, after providing them with a list of the possible methods for establishing responsibilities upon the Nigerian listed companies, to indicate the extent of their agreement with each of these methods.

The sixth question asked participants, after providing them with a list of audience categories, to indicate the extent of their agreement on whether each of those audience ay be held responsible.

This questionnaire was administered to a sample of 250 respondents (of which 189 usable responses 75.6 percent were received and analyses): 60 financial managers (54 of which returned usable responses – 73%); 71 public accountants who were members of the (57 of which returned usable responses – 81 %); 50 academics in the accounting field (50 of which returned usable responses – 82%); and 45 officials from governmental and non-governmental bodies concerned (28 of which returned usable responses – 62%).


5.3 Conclusions

Based upon the descriptive work, theoretical and conceptual analysis and empirical survey, several major conclusions emerged. These conclusions are summarized under the following six main headings: accounting and its environment in Nigeria which includes the social political and economic environment; the current framework of corporate reporting and disclosure practices in Nigeria and their limitations; the need for an accountability framework for corporate reporting and disclosure practices in Nigeria; and the empirical survey.

5.3.1: Accounting and its Environment in Nigeria

The following general conclusions emerged from the review of the literature on accounting and its environment in Nigeria.

Accounting principles, procedures and standards are evolution of environmental factors which means that accounting practices must respond to the environmental factors at play and change with elements in its environment. i.e the political, economic and social factors that determine the social norms and belief of the people and their aspirations and motivations which influence their demand for stewardship, transparency and accountability from institutions operating in the country to provide them with information.

Nigeria endowed with abundant natural and human resources suffer from political, social and economic problem cause by corruption in all the sectors of the economy, civil unrest, terrorism, poverty, illiteracy , unemployment etc need to restructure its accounting practices in order to cope with the changes in the society, through the attraction of foreign direct investment to diversify the economy and to overcome the present problems confronting the nation. Literature has shown that accounting and corporate reporting and disclosure practices in Nigeria has been deficient over the years because they are mainly based on providing information to the providers of finance and a few set of stakeholders who may be having interest in the organization. Alternative approach is needed to improve corporate reporting and disclosure practices of corporate entities in the country such approaches as transfer of accounting technological know- how, uniform accounting practices and code of best practices that will aid transformation and development of the economy. Accounting is belief to be the modeling factor for economic development of any country.

5.3.2: The Current Framework of Corporate Reporting and Disclosure Practices in Nigeria

The basis of legitimating for corporate reporting and disclosure practices in Nigeria is derived, firstly, from the relevant laws and legislation and, secondly, from the generally accepted accounting principles (GAAP) which Nigeria has converged it local standard and adopted the international financial reporting standards (IFRSs) in 2012.
First and foremost, the legal basis (particularly the Companies and Allied matters Act (CAMA1990) emphasizes a restricted stewardship role for Corporate reporting and disclosure practices, according to the legal basis, can be viewed as restricting itself to shareholders and purely financial aspects. Moreover, this basis largely fails to give details and specifications of the financial accounting required. Consequently, it has been argued that the present accounting and disclosure framework cannot be expected to provide a meaningful basis for corporate reporting in Nigeria due to the lack of clarity, specification and completeness.

Secondly, the Nigerian capital Market is primarily interested in the protection of investors fund, ensure good practices in the market thereby, it require that listed companies provide adequate financial information which will aid the decision making process of potential investors. The information requirement of this organ is purely financial it does not include information concerning the impacts of this organization on the environment.

Thirdly, the corporate affairs corporation was only empowered to ensure that companies comply with the requirement of the law as stated in the companies and allied matters act, it is not empowered to ensure that companies report and disclose information relating to corporate social responsibility which is regarded as voluntary information.

Fourthly, the financial reporting council of Nigeria is establish to provides regulatory and oversight function for financial reporting and corporate governance, to protect investors and shareholders by ensuring good practices, accuracy and reliability of the financial reports. It does not provide specification for corporate social responsibility by corporate entities in Nigeria.

Finally, the adoption and application of international financial reporting standards (IFRSs), even though it came with a lot of benefit such as internationalization and convergence of financial reporting across the globe it also has a lot of limitation s and shortcomings in its application in Nigeria because it does not have a specific standard that critically specify how issues relating to corporate social responsibility and environmental impact of an organization which is not financial should be disclose in the financial statements of corporate entities in Nigeria.

5.3.3 Theories for Approaching Corporate Social Responsibility Reporting

Various theories have been proposed and discussed by various authors in order to shed light on the type of theory that relate to the issue of corporate social responsibility reporting and disclosure practices. Such theories like the stakeholder’s theory, legitimacy theory, institutional theory and accountability approach. The stakeholder’s theory assumed that disclosure of social and environmental information by an organization is as a result of pressure from stakeholders. The proposition of the theory is that a firm’s success is dependent upon the successful management of all the relationships that a firm has with its stakeholders. While legitimacy theory argues that organization seek to ensure that they operate within the bounds and norms of the society.

Accountability approach proposed that an organization is responsible to account for the resources entrusted to it and is expected to provide account of its activities to the prospective report on the control and use of resources by those accountable for their use and control to those whom they are accountable.

5.3.4 The Need for Accountability Framework for Corporate Social Responsibility Reporting and Disclosure Practices in Nigeria

Accounting is considered a veritable tool for economic development of a country considering the social role it play in the society by providing information that aid decision making process of interested groups in the society. The flows of accounting information reflect and construct society in which they are part, different forms of accounting information can be seen as reflecting different distributions of power and influence in society. Accordingly, the uneven distribution of information can, to a certain extent, be conceived as an indication of the existence of uneven distribution of power and influence in the society. In the same sense, if a change in the flows of accounting information occurs, this may reveal a change in society and hence may facilitate a change in the distribution of power and influence in such a society. Thus, accounting systems have the potential for supporting change in a society and are never neutral.

Given that accounting systems have the potential for enabling change in a society, one can contend that there is a need for change towards a greater social role that accounting can play in Nigeria. That is, there is a need for an approach for corporate reporting and disclosure practices that will be of greater use than the present one which is based upon the Companies and Allied Matters Act and the recently adopted IFRSs. For a developing country like Nigeria, wider disclosure is required of companies operating in the country in order to redress the problems of information asymmetry, not just the one which can be seen as attempting to restrict itself to a consideration of the relationships between companies and a very limited set of stakeholders (providers of finance) within a strictly economic domain (financial transactions). There is a need for wider disclosure that can contribute to both the understanding, debate and, hence, solutions of the social and economic problems that Nigeria experiences therefore, it is suggested to extend the existing disclosure and reporting practices of the Nigerian listed companies to incorporate corporate social responsibility reporting and disclosure practices. It believe that the wider disclosure in terms of corporate social responsibility information, suggested to be incorporated in corporate reporting and disclosure practices of corporate entities calls for a broad accountability framework in order to restructure the form of corporate disclosure.

Such a belief is predicated upon the following propositions:

  1. It could be argued that the accountability approach can ensure legitimate and justified corporate reporting and disclosure practices since it is a social concept, rather than a concept limited to economic matters. Within a broader concept of accountability the interests of some users do not assume more importance than the interests of other users and so the needs of shareholders and financial market investors are not the only ones that dominate. It should be the needs of society and the public that dominate. Thus, it can be seen as an approach within which more socially-oriented information is likely to be provided by the company.
  2. The accountability approach can be seen as a way towards the realization of fairness; a concept concomitant with the public interest and re-introducing an ethical basis to accounting. Such a concept is fundamental to any accounting system since the purpose is to provide a fair system of information.
  3. The accountability approach can be said to be as an approach that is based on notions of ‘right to know’ or ‘right to information’. Such a property rights’ perspective overcomes the problem of ‘user needs’ and how these may be established. Thus, accountability confers these rights directly and explicitly without resorting to the information needs to determine rights.
  4. Corporate reporting has its basis and legitimation in the law. Moreover, accountability also derives its basis from the law in terms of the stewardship function. Consequently, accountability can be considered as a non radical evolutionary idea based upon the existing status quo, so it may be accepted by society at large. In addition, it seems that many of the information provided by the existing reporting practice is consistent with an accountability framework.
  5. Accountability can be said to be an essential element in any democratic process.
  6. It seems fair to conclude that the accountability framework is a universal approach (which can be applied in both developed and developing countries) and is likely to provide the opportunity to ensure a legitimate and justified corporate reporting and disclosure practices in Nigeria.

A specific proposal for an accountability framework as a basis for corporate social responsibility reporting and disclosure practices in Nigeria has been outlined. In this framework, it has been suggested that there are widespread relationships between the company and individuals, groups, organizations and even society at large (stakeholders, constituencies or audiences) as a result of the company’s actions and policies which might affect them. These relationships imply responsibility relationships (or contracts – whether explicit or implied). It has been a summed that any responsibility relationship between the company and those affected by its actions and policies implies a double responsibility on the part of the company: responsibility for actions and responsibility to account for these actions. It has been suggested that such responsibility relationships can be legally, quasi Legally and morally established. These might be seen as capable bases for establishing responsibilities in Nigeria since rule of the law, supremacy of law and ethical values and considerations are emphasised by the Constitution.

5.3.5 The Empirical Survey

Based on the findings of the empirical survey, the following major conclusions are reported:
First and foremost, the majority of respondents agreed with the suggestion that Nigerian listed companies should prepare their annual reports for the purposes of provision of information to those audience with purely financial interests and involvement in these companies, and for stewardship and decision usefulness objectives. Further, they (except some financial management respondents) saw these companies as paying no particular attention to the provision of information to other sections in the Nigerian society (such as government departments and agencies, employees, society at large) with more indirect interests and less direct involvement in the oi 1yinie .Exceptionally, some financial management respondents tI o i o ht ii at ii o t Nigerian listed companies pay some attention to these purposes. Their position may be attributed to one or all of the following:

  1. As preparers of annual accounts, they could not undervalue a purpose which might seem socially and morally desirable.
  2. A growing awareness amongst them of the need for social responsibilities.
  3. They may interpret that when the public companies publish their accounts in a daily newspaper or send copies of such accounts to the registrar of the Companies in the corporate affairs commission as required by the Companies and Allied Matters Act CAMA (1990) as amended that public companies are to providing information to government and society at large to help in judging the actions and policies of the companies.

Therefore, it would seem obvious that the four respondent groups recognize that corporate reporting and disclosure practices in Nigeria are, to a large extent, consistent with the objectives of annual reports as implied and stated by the Companies and Allied matters Act and the standards of the IASB in terms of the provision of information to a limited set of audiences (particularly providers of finance) for stewardship and decision usefulness objectives. At the same time, the provision of information to a wider range of audience in Nigeria especially those with less direct interests and involvement in the company to a certain extent, ignored by these current reporting practices.

Second: The vast majority of respondents perceived the following as the most important reasons for adopting lFRSs in Nigeria: the comparability of financial statement; the saving of money, time and experts required establishing national standards; the belief that the lFRSs would facilitate international trade and foreign direct investment. Therefore, it would appear evident that the four respondent groups perceived the fundamental necessity for the adoption of these standards in Nigerian as connected to the existence of some problems relating to the stature of the national accounting profession, the financial and technical obstacles involved in establishing national accounting standards, the expectation of economic benefits as a result of converging local accounting and reporting practices with lFRSs; and the existence of some influential groups and international bodies with the direction towards international convergence of accounting and reporting practices. It is of interest that few respondents perceived the appropriateness and sufficiency of these standards to Nigerian environment to be important reasons for their adoption.

Thirdly, The relevance and sufficiency of lFRSs to the environment of Nigeria and the possible willingness to adapt, supplement or change them, some marked differences appeared in the opinion of financial managers and public accountants (who can be seen as preparers of annual reports) on the one hand, and academics and official bodies on the other. Over half of the responding financial managers and public accountants demonstrated support for the adoption of lFRSs in Nigeria. Those respondents perceived these standards as in luding all t o e that are needed for the environment of Nigeria and sufficient for the interests of all sections in the society. Their attitude might be attributed to the following:

  1. Those public accountants respondents may be eager to be associated with a profession with some international status something which would foster confidence in the profession and raise its local esteem to the highest possible level.
  2. Those financial management respondents may be convinced that the adoption of the lFRSs would facilitate international trade and investment.
  3. The above both groups may prefer to refer to definite professional guidelines than referring to generally accepted accounting standards (GAAP) lacking definitive bench marks.

In spite of this positive stance towards the adoption of the lFRSs in Nigeria, almost half of the respondents supported the suggestion calling for the incorporation of the provision for corporate social responsibility disclosure in the lFRSs. However, majority of respondents rejected the other suggestion asking for the development of new local standards instead of adopting existing IFRSs in Nigeria. Agreeing on the suggestion calling for wider disclosure may first appear as confusing or contradictory. But the reasons behind that these groups of respondents did not entirely reject such a suggestion may be related to one or both of the following:

  1. An increasing awareness of social responsibilities of the Nigerian listed companies.
  2. This suggestion seems to be as socially and morally desirable, so it cannot easily be rejected by those who may be regarded as preparers of annual reports in Nigeria.

On the other hand, the overwhelming majority of academics and over half of official bodies’ respondents can be seen as questioning the relevance and adequacy of these standards to the environment of Nigeria. They perceived these standards as not including what are deemed necessary for the country and not sufficient for the interests of those audience that are not providers of finance. The vast majority of academic respondents and the majority of official bodies’ respondents supported the suggestion calling for wider disclosure. In addition, Little more than half of the official bodies also gave their support for such a suggestion. The negative attitude of these groups of respondents towards the lFRSs may have emanated from the following:

  1. The academics’ educational background and occupational status may allow them to be socially, economically, politically and professionally aware and, to a certain degree, be neutral in judging a given situation. The official bodies (governmental and non-governmental) may not possess the technological and professional competence of academics and professionals, but they may be regarded as representing some interests of society at large. The fundamental issues in accounting may be viewed by these groups from the perspective of social, political and economic situation.
  2. The adoption of the lFRSs in NIgria may be perceived by these groups as being the imposition of standards by economically superior countries-a form of accounting colonialism. It can be concluded, therefore, that despite the existence of some obvious differences in the opinions of financial managers and public accountants on the one hand, and academics and official bodies on the other as to the relevance and adequacy of the lFRSs to the environment of Nigeria, the general perceptions were for the direction of change towards the incorporation of wider disclosure of social responsibility information in these standards.

Fourth: The respondents’ perceptions on the desirability and feasibility of the disclosure of corporate social responsibility type information in Nigeria suggest that there is a willingness to accept that the companies should disclose this sort of information so as, perhaps, bring about some beneficial socioeconomic effects. But the overwhelming majority of the respondents tended to believe that companies would be unwilling to disclose such a type of information without legal and professional pressure. In addition, it would appear that the vast majority of the respondents would like to see the suggested corporate social responsibility disclosure for Nigeria as being expressed in all suggested forms, i.e. descriptive terms, non monetary but quantitative (statistical) terms and monetary ten s.

Fifth: The analysis of respondents’ perceptions on corporate social responsibility

  1. The vast majority of respondents from the all groups showed positive attitudes towards the notion of wider social responsibilities of corporate entities to a wider audience (including society at large). But the great majority of respondents opposed what may be seen as radical views on social responsibility. The overwhelming majority of the financial management and public accountant respondents (who can be seen as preparers of annual reports) believed that companies must accept certain wider social responsibilities as necessary for the viability of the business. On the other hand, the vast majority of the academics and officials thought that the Nigerian listed companies should accept wider social responsibilities towards a wider audience including society at large because a social contract can be seen as existing between the business and society.
  2. On the vehicle for ensuring that companies are aware of their social responsibilities, it seems that respondents from all groups had the belief that the law provides the best and clearest means of communication the social responsibilities of the corporate entities. In addition, the overwhelming majority of respondents thought that qua i law and ethical considerations could provide another means of specifying the social responsibilities of the Nigerian listed companies.
  3. As to the perceptions on right to information, the vast majority of the respondents agreed with the notion that stakeholders, other than providers of finance, should have a right to information about actions for which the company is held responsible. It can be inferred, therefore, that respondents from the four groups were willing to accept notions of corporate social responsibility and accountability within the context of Nigeria, although possibly for differing reasons. While financial management and public accountant respondents (preparers of annual reports) thought that acceptance of wider social responsibilities by the companies is necessary for the viability of the business, the academics and officials believed that it is imperative since a social contract exists between the business and society.

5.4 Recommendations

To enhance accountability in Nigeria, the following are some of the suggested recommendation from this study.

  1. First and foremost, it is recommended that financial reporting council of Nigeria should establish local standards that will incorporate corporate social responsibility which will serve as guidance for the preparation of corporate reports in Nigeria.
  2. Secondly, government should give proper attention to accounting education in Nigeria because of the important role that accounting play in the economic development of the country. Also, such subjects like sustainability reporting and corporate social responsibility reporting should be included into the accounting curriculum of both secondary and tertiary institutions in order to equip accounting student with the techniques of preparation of corporate social responsibility reports in the annual corporate reports of companies in Nigeria.
  3. Thirdly, it is recommended that Companies and Allied Matters Act (CAMA, 1990) as amended should be reviewed from time to time to ensure that old legislations relating to corporate reporting and disclosure are modernized to accommodate changes in the society.
  4. In addition, it is recommended that corporate social responsibility should be made compulsory for all corporate entities in Nigeria because some companies abuse the current voluntary disclosure practices and do not include it in their corporate reports.
  5. More so, it is recommended that corporate social responsibility should be among the requirement for listing in the Nigeria Stock Exchange and also Securities and Exchange Commission should ensure that organizations participating in the capital market frequently with other requirement disclose their corporate social responsibility reports.
  6. Finally, it is recommended that the accounting profession in Nigeria adopt and use the proposed accountability framework discussed earlier in order to provide a wider disclosure of corporate social responsibility information to a wider audience.

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