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The broad objective of financial reports or financial statements is to communicate economic forecast and information about the resources and performance of a reporting firm (Alexander & Britton, 2012). This information is intended to assist users in making well- reasoned investment, credit, and financial decisions about providing resources to the firm (Arowoshegbe, Uniamikogbo, & Atu, 2017).

Due to this fact, it is perceived that the preparers and auditors of financial statements did a quality work as their reports are taken by stakeholders to be truthful. It, therefore, becomes imperative for firms to provide high-quality financial information that will aid decision making of investors and other users of financial information (IASB, 2008).

The quality of financial reporting can be measured in terms of its features, such as relevance, faithful representation, understandability, comparability, and timeliness of the financial reports (Beest, Braam & Boelens, 2009). Past studies have indicated that these qualities are found in financial statements when preparers of financial reports uphold high ethical standards in relation to their duties.

Ethical accounting practices are governed by several ethical standards issued by accounting bodies and agencies globally and locally. Globally, the International Federation of Accountants (IFAC) set out the code of ethics for professional accountant which includes integrity, objectivity, and professional competence and due care, confidentiality and professional behavior.

These codes of ethics can be applied to both professional accountants in public practices and professional accountants in business (IFAC, 2014). In Nigeria, various bodies and agencies regulate the operations of accountants as well as their ethical dealings and practices.

These bodies include – the Companies and Allied Matters Act 2016 (as amended), Financial Reporting Council (FRC), Institute of Chartered Accountant of Nigeria (ICAN), the Association of National Accountants of Nigeria (ANAN), as well as the Chartered Institute of Taxation of Nigeria (CITN). Numerous ethical issues have been listed out, ranging from conflict of interest, insider dealings, acceptance of gift, Professional behaviour (Enofe, Edemenya & Osunbor, 2015; Fatoki, 2015) despite the profession having global and local bodies regulating the code of ethics.

Ethics is generally concerned with the rightness or wrongness of an act. It deals with human conduct in relation to what is morally good and bad, right and wrong (Rush, 2013). Researchers sometimes confuse ethics with morality. Ngamen (2014) made a clear distinction between ethics and morality opining that ethics is particular or specific in nature, while morality is general in nature.

Different professions (Law, Medicine, Engineering, Architecture, etc.) have their respective code of ethics, which are particular to the profession. Generally, according to worlds’ practice, if an individual commits an offence or crime, for example, in a case of murder, it is generally known that the accused will be prosecuted and if found guilty, will be made to face the full wrath of the law.

Looking at the strength of agencies and regulating bodies in the accounting profession, it is quite sad that the profession’s end products (financial statements and reports) still lacks public confidence due to the failure and ultimate collapse of some major firms. Eron, WorldCom, and Global Crossing in the USA; Paramalot in Italy; and Cadbury, NAMPAK and Afri-Bank in Nigeria have been noted as classical examples. Reportedly, these firms were consistently audited by reputable firms who were also indicted, of which one of the big four audit firms was listed (Yunanda & Majid, 2011; Salaudeen, Ibikunle & Chima, 2015).

More recently, an educational sector in Nigeria – the Joint Admission Matriculation Board (JAMB) in July 2017 announced the remittance of N5bn to the Federal Government which happens to be the highest so far in the last 40 years of its existence (Punch Newspaper, September 14, 2017).

This incited questions on previously remitted amounts and consequently led to the probe of previous management. Not quite long, the same educational sector (JAMB) reported that a snake swallowed N36 million of its revenue (Vanguard Newspaper, February 17, 2018). It is quite sad that the ethical accounting practices are not carried out to the latter with the utmost standards.

Behaving ethically in accounting is more important than auditing because accounting system prepares financial statements for auditing (Mahdavikhou & Khotanlou, 2011). In other words, accountant’s obligations go beyond their immediate client. Therefore behaving ethically is an essential and expected trait (Carrol, 2010).

Professional ethics is important to accountants and those who rely on information provided by accountants because ethical behaviour entails taking the moral point of view. Internalizing and trying to make professional ethics in accounting profession leads to promoting the quality of financial reporting. It is on this context that this research work focuses on the extent to which Accounting Ethics guides in preparing the quality financial report in fulfilling the obligations to the public expectations.


The collapse of various firms and corporate organizations in the past two decades have presented serious financial consequences to investors, employees and the public, hence generating to credibility issues. Adoption of international standards of financial is taking shape. Poor financial reporting has plagued many jurisdictions in the developing world but still, there are few studies focusing on accounting ethics and financial reporting in Nigeria.

Individual from time to time have to face ethical dilemmas and the problem of weakness of will. Accountants are no different. In the working life of an accountant they encounter numerous situations where they are tempted to choose between right or wrong.

That is why a feature of accountancy’s claim to professionalism is its commitments to ethical standards. This involves an assurance that the accountancy bodies and their members will not pursue their material self-interests in ways that conflict with their duties to the public interest (Appah, 2010).

Even though recognized professional accounting bodies in Nigeria, like ICAN and ANAN, are trying very hard to ensure best practice in the auditing profession via the enforcement of professional code of conduct for their members, the strict observance of such codes is still questionable.

Since there is growing criticism of accountants both in public practice and in private sectors, it is of significance to embark on a study such as this to further explore the problematic issues faced by the professional accountants with reference to the ethical standards. Mathews and Perera (2010) observes that every profession has a built in code of ethics to compel ethical behavior on its members. The rationale for this is obvious.

The Nigerian society over the years has witnessed its fair share of corporate scandals in the financial and non-financial sectors of the economy. As Ogbonna (2010) argues that any organization that lacks ethical consideration may not survive for a long time to achieve its desired goals and objectives and that of its stakeholders.

These failures of corporate entities have been attributed to accountants not adhering to the codes of conduct evidenced not only in the contents of financial reports but also in its reliability by end users. Hence adequate care has to be taken on how these financial statements are presented.

Aguolu (2013) says that these failures have brought to greater scrutiny the work of the accountant from both within the profession and from outside. Several ethical issues have been discussed in recent times ranging from conflict of interest, insider’s dealings, objectivity, acceptance of gifts etc. scholars are of the opinion that all these ethical issues affect the quality of financial statements.

The code of corporate governance (2011) provided for the composition of an ethics committee in an organization where the committee is responsible for deliberating on ethical issues as well as upholding ethical standards in the organization.

This has not really yielded the right result as intended as some of the scandals over the past decade have been traced to ethical issues where most times management and auditors compromised integrity for personal and selfish gain to the detriment of the organization.

Some firms manipulated its financial reports through off balance sheet financing because they lacked independence from senior executives while some overstated its audited financial statements, others concealed their indebtedness to the tune of billions, the financial sector crisis also witnessed few years ago also revealed that the banks connived with the auditors to issue a true and fair view.

A critical look at all these cases show that they all were as a result of the violation of ethical practices, hence there’s need to critically appraise ethical issues in an organization and how they affect financial reporting quality.


The major aim of the study is to examine ethical accounting practices and reporting quality of firms in Nigeria. Other specific objectives are as follows;

  1. To examine the impact of objectivity of financial reporting quality of Nigerian firms.
  2. To examine the effect of disclosure of financial reporting quality of Nigerian firms.
  3. To examine the influence of integrity of financial reporting quality of Nigerian firms.
  4. To examine the effect of professional competence, due care on financial reporting quality.
  5. To examine the relationship between accounting ethical standards and financial reporting quality of firms in Osun state.
  6. To examine the role of accounting Ethics in improving accountant’s proficiency.


  1. What is the impact of objectivity of financial reporting quality of Nigerian firms?
  2. What is the effect of disclosure of financial reporting quality of Nigerian firms?
  3. How does integrity influence financial reporting quality of Nigerian firms?
  4. What is the effect of professional competence, due care on financial reporting quality of Nigerian firms?
  5. What is the relationship between accounting ethical standards and financial reporting quality of firms in Osun state?
  6. What is the role of accounting Ethics in improving accountant’s proficiency?


Hypothesis 1

H0: Professional competence of accountants does not have significant effect on the understandability of their firm’s financial reports.

  1. : Professional competence of accountants has a significant effect on the understandability of their firm’s financial reports.

Hypothesis 2

H0: Objectivity has no impact on financial reporting quality of Nigerian firms.

  1. : Objectivity has a significant impact on financial reporting quality of Nigerian firms.

Hypothesis 3

H0: There is no significant relationship between accounting ethical standards and financial reporting quality of firms in Osun state.

  1. : There is a significant relationship between accounting ethical standards and financial reporting quality of firms in Osun state.


This study is largely significant because it sought to find empirical answers to questions on ethical accounting practices and financial reporting in Nigeria. The relevance of accounting information is its influence on the judgments made by users, particularly the investors; how they conclude on investment choices.

Therefore, reporting of relevant accounting information is ethically significant. The study of how ethics affect financial reporting quality in terms of relevance is necessary in assisting managements, accountants, auditors, regulatory bodies, policy makers and investors.

And the finding of this study adds to the existing literature on ethics and its relationship with the relevance of financial of financial reports of Nigeria quoted companies. The study is to remind professional accountants who provide the technical expertise in financial reporting to remember and apply their professions code of ethics.

This research will also serve as a resource base to other scholars and researchers interested in carrying out further research in this field subsequently, if applied will go to an extent to provide new explanation to the topic.


The study is restricted to ethical accounting practices and reporting quality of firms in Nigeria: case study of selected firms in Osun State.


Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.


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Accounting: Accounting is defined by Douglas (1976) as “a discipline concerned with the recording, analysis, and forecasting of income and wealth of business and other entities.

Accounting Practice: An accounting practice is a routine manner in which the day-to-day financial activities of a business entity are gathered and recorded. A firm’s accounting practice refers to the method by which its accounting policies are implemented and adhered to on a routine basis, typically by an accountant, auditor, or a team of accounting professionals

Financial reporting: Is the financial results of an organization that are released to the public. This reporting is a key function of the controller, who may be assisted by the investor relations officer if an organization is publicly held. It also refers to the communication of financial information, like financial statements, to the financial statement users, like investors and creditors.

Financial reporting is typically viewed as companies issuing financial statements. A general purpose set of financial statements include a balance sheet, income statement, statement of owner’s equity, and statement of cash flows, but financial reporting is much more broad than just as set of financial statements.

Financial reporting quality: The accuracy with which a company’s reported financials reflect its operating performance and their usefulness for forecasting future cash flows.


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