CHAPTER ONE
INTRODUCTION
1.0 Introduction
Financial reporting is the process of documenting and communicating financial activities and performance over specific time periods, typically on a quarterly or yearly basis. Companies use financial reports to organize accounting data and report on current financial status. Financial reports are also essential in the projections of future profitability, industry position and growth, and many financial reports are available for public review.
A farmer, who plants corps, expects result, similarly to student who sits for examination expects results. The same is also true of an investor. For the farmer, the result might be communicated to us in the form of a bumper harvest. It result sheet or a report card would usually sufficed for a student. However, in the case of an investor, the result is communicated through the financial reports. Financial reports are law to be prepared by every limited liability company in accordance with the Company’s act of 2009; every company shall cause accounting records to be kept. The accounting records shall be sufficient to show and explain the transactions of the company and shall be such as to disclose with reasonable accuracy, at any time the financial position of the company.
In the banking industry, financial reports are of great interest to the general public because the banks directly or indirectly interact with people. This public interest has caused companies (including banks) to accept social as well as economic, financial and legal responsibilities and has created a consequence, a growing need for the communication of information to account for the results which are of considerable interest a wide range of individuals and organizations. So, it becomes very imperative for reliable information to be circulated to interested parties which can enable them to acquire an essential knowledge of the way is which companies particularly the bank are performing in relation to the public interest. This fact is further educated by the recommendation of the working party set up in Britain by the Accounting standard committee in October 1974 under the chairmanship of Derek booth man which took a study of the scope and aims of publisher financial statements. The committee recommended that: “The fundamental objectives of corporate report are to communicate economic measurement of the reporting entity useful to those having reasonable right to such information”
It is not an over statement when one says that the banking industry is the flume on which the national economy rotates. This mammoth, impact upon a country economy therefore makes it a public affair is everybody in the country has a right to know what such organizations are doing, more so all information, necessary to explain the organization’s activities fully should be provided in the annual reports with transparency and accountability. One of the most significant aspects of the information system of business enterprises in an economy is that which deals with the communication of financial data, especially in describing business transparency, accountability, profitability and financial position. This information is important because it attempts to partial the economic resources of the enterprises and the financial results, which have been achieved by its management when those resources have been put to use. It attempts to reveal how effective management has been in resources utilization as well as the financial reward available to compensate for risk taken by various suppliers of capital.

1.1 Background of the Case Study
Union Trust Bank is the only private indigenous bank in Sierra Leone with a robust and competitive products portfolio. At the Union Trust Bank, we have a variety of high quality value added products and services tailored to provide and deliver banking, financial and advisory solutions. We also have enviable geographic network of branches, outlets and agencies. We have wide choice of credible international and local funds transfer agencies. Union Trust Bank Limited (UTB) was incorporated on 26th April 1995 as a private limited liability company under the Companies’ Act (Cap.249) of the Laws of Sierra Leone. It is licensed by the Bank of Sierra Leone to carry on banking business under the Banking Act, 2000.
The shareholders of the bank, comprising indigenous individuals and corporate entities, constitute a cross-section of the principal actors in the national economy. This character renders UTB the first major private financial institution to be conceived, promoted, owned and managed by indigenous Sierra Leoneans. From the initial authorized share capital of Le1.5 billion, the bank increased its capital to Le3.0 billion in 2004. UTB was founded in 1995 by Sierra Leonean individuals and corporations and was registered as a limited liability company. It began offering banking services following the issuance of a commercial banking license by the Bank of Sierra Leone. On 17 March 2017, the bank celebrated the opening of its headquarters building, on Howe Street, in Freetown, performed by Ernest Bai Koroma the president of Sierra Leone.
As of May 2017, UTB maintains branches at the following locations:
(1) Main Branch - Lightfoot-Boston Street, Freetown (2) Njala University Branch - Njala University, Mokonde Campus, Moyamba District[6] (3) Kenema Branch - 19 Hangha Road, Kenema, Eastern Province (4) Bo Branch - 7 Bojon Street, Bo, Southern Province (5) Kono Branch - 5 Old Yengema Road, Koidu, Kono District (6) Kambia Branch - Sierra Leone-Guinea Highway, Kambia (7) Lumley Branch - Lumley Road, Freetown (8) Kissy Branch - 49 Baibureh Road, Kissy, Freetown (9) Magburaka Branch - Kono Makeni Highway, Magburaka (10) Liverpool Street Branch - Liverpool Street, Freetown (11) Brookfields Branch - Main Motor Road, Freetown (12) New England Ville Branch - Jomo Kenyatta Road, Freetown (13) Lunsar Branch - Lunsar (14) Yoni Branch - Mile 91, Freetown Bo Highway
Union Trust Bank is having 14 branches and 7 outlets across the country with a mission of ‘establishment of an efficient, sound and enduring financial institution that gainfully explores the tremendous human and material potentials of the country in order to create national wealth and ensure lasting prosperity’:
• Designing, developing and delivering products and services at affordable cost;
• Satisfying customers and earning their trust and loyalty;
• Creating individual and national wealth;
• Enhancing shareholder value and returns; and always behaving and acting as a socially responsible corporate personality.

1.2 Statement of the Problem
The genuineness or other wise of financial reports has attracted diverse opinions from different quarters, such opinions can come from the general public, tax authorities, shareholders, creditors with long or short term interest, financial analyst and potential investors. They argue that the financial reports do not usually give an accurate data about the action ties of such business concerns to promote transparency and accountability, for example, the idea of stating assets at their historical cost do not favour most investors as they argue that inflation is not usually taken care of, though the real value of such assets might have been eroded.
Again since the financial reports prepared by managements, the shareholders and others argue that there would usually be some elements of bias on the part of management in the disclosure of management’s financial ineptitude and does not promote transparency and accountability. But in any case the management claims that some inherent problems would usually affect the accuracy of such reports which limit its transparency. It is therefore the intention of this our research to delve into the matter to enable us establish a relationship between financial reporting and promoting transparency and accountability evaluation in a bank.

1.3 Objectives of the Study
Companies including those in the banking industry have had to face the onerous task of presenting a credible and generally acceptable financial statement in their annual reports in promoting transparency and accountability, to the various people to whom they own such obligations. The purpose of the study is:
• To determine the various financial reports used by banks.
• To ascertain the problems of using financial reports in promoting transparency and accountability evaluation of banks.
• To examine the use of historical cost convention adopted by banks in stating this balance sheet items on investors.
• To determine if there is a relationship between financial reporting, transparency and accountability.
• To offer recommendations and solutions on the best way financial reports could use in assessing bank performance.

1.4 Research Questions
• What are the various financial reports used by banks?
• What are the problems of using financial reports in promoting transparency and accountability in the evaluation of banks?
• What are the historical cost convention adopted by banks in stating their balance sheet items?
• What is the relationship between financial reporting, transparency and accountability?
• What are the recommendations and best solutions to use in assessing bank’s performance?

1.5 Research Hypothesis
• Base on the statement of problem and objections of this research work the following general hypothesis are formulated:
• How Investment decision based entirely on the financial statements will lead to poor and lazy decisions.
• How the efficiency of financial reports is great affected by inflationary trends in the economy. How the efficiency of financial reports is not greatly affected by inflationary trends in the economy.
• How financial report are not a true in director of banks performance in promoting transparency and accountability. How financial reports are true in director of banks performance in promoting transparency and accountability.

1.6 Significance of the Study
The banking industry is a very important sector of the economy. This is because banks can determine the direction of growth or development of the economy through the financial service rendered by banks. The financial services which includes, funds mobilization, safekeeping and custodianship, funds transfer, foreign exchange transaction equipment leasing, extension of loans and advances, investment in securities, bill discounting etc. Investment key sector of the national economy of which the banking industry is one becomes a goal-getters priority. Owing to this, it becomes necessary that financial reports presented by banks satisfy the need of the users of the reports. Specially, at the end of this study, we shall have been able to establish:
• Whether or not the financial reports affects investment in the banking industry.
• Whether or not the annual financial report currently reflect the inflationary effects.
• Whether or not banks follow rigid accounting practices. The emphasis of this research is not to discuss the determinants of performance in promoting transparency and accountability, but to establish a relationship between financial reporting, promoting transparency and accountability so that potential investors in banking industry may clearly define the stand.

1.7 Delimitation of the Study
The aim of the study is to examine, the use of financial reporting in assessing banks performance in promoting transparency and accountability, however it will be restricted to investigations carried out on Union Trust Bank SL Limited. To enable the research have a broad view, the study will not be based on one branch. A study of some selected branches of the bank will also be carried out. But in any case, the following among others are the numerous constraint, which are envisaged;
• LITERATURE: The dearth of related books and journals will no doubt affect the quality of the research.
• TIME: The greatest employer of man, which is time will not be in our favour though we manage it considering the time allocated to our studies, fellowship and the project.
• FINANCE: The research work generally involves money but considering our stand as a student. We will be limited by financial in achieving our aim of have a population rather we have found our self in using sample size, even visit to our case of study.
• RESPONSE RATE: The information to be analyzed in the study will be limited to those who would respond voluntarily to the questionnaire.
• PAUCITY OF INDUSTRY: At the course of our research I come to release that many banks does not have any form inter-relationships which make things difficult for us in using one set of information generated as touching planning and control in Union Trust Bank SL Limited to generalize issues. That leads us into more research, which will continue even after this project.

1.8 Definition of Terms
Financial Reporting: Financial reporting is the process of documenting and communicating financial activities and performance over specific time periods, typically on a quarterly or yearly basis. Companies use financial reports to organize accounting data and report on current financial status. Financial reports are also essential in the projections of future profitability, industry position and growth, and many financial reports are available for public review.
Transparency: Although the term transparency is not a financial term or metric per se, it has become increasingly important to consumers and investors over the last several years. Transparency is the extent to which investors have ready access to required financial information about a company, such as price levels, market depth, and audited financial reports. Investors also require transparency with investment firms and funds surrounding the various fees that'll be charged to them. Transparency can also include clarity for consumers regarding the fees that bank charges or the rate that consumers will ultimately pay to their credit card company.
Accountability: Accountability is an acceptance of responsibility for honest and ethical conduct towards others. In the corporate world, a company's accountability extends to its shareholders, employees, and the wider community in which it operates. In a wider sense, accountability implies a willingness to be judged on performance.
Auditing: The objective examination of financial statements initially prepared by management by a third party other than the prepared or used with the goal of establishing the fairness of representations made therein and reporting on same a guides to interested users.
Bankrupt: Inability of person to meet his liabilities as they mature.
Fraud: Misrepresentation by a person to be untrue or made with reckless indifference as whether the fact in true with the intention of deceiving the other party and with the result that the other party is injured.
Financial Statements: This covers balance sheets, income statement or profit and loss accounts notes and other statement and explanatory materials.
True and Fair View: The opinion of an auditor, which depicts compliance, will generally accepted accounting principles and full of fair disclose of facts.

1.9 Organization of the study
The study will be comprises of five chapters
Chapter One contains the introductory aspect of the research which includes the background of the study, statement of the problem, research objectives etc.
Chapter Two would provide the review of related literature and the theoretical framework of the study.
Chapter Three will discuss about the research methodology.
Chapter Four would be discussing about data presentation, analysis and discussion of the findings.
Chapter Five would capture the summary, conclusion and recommendations.

1.10 Summary
This chapter gives a brief description about the background of the impact of financial reporting in promoting transparency and accountability in banks and as well as the background of the case study which serve as the subject matter to be investigated, it also entails the problem statement that the researchers want to solved, the aim and objectives of the study, the various research questions, the significance of the study, the delimitation of the study which includes the scope, and as well as the organization of the study.