ABSTRACT

This research study evaluates the effect of tax policies on financial reporting. It is a survey evidence in which some selected banks were used as main focus for the study. One of the aims of government in enacting tax policies is to control certain activities in the economy. They are also interested in knowing the way the tax policies affect the areas where they are applicable. Individuals and corporations are also interest in knowing the effect of these policies on their reports. But it has been noticed that lack of knowledge of tax policies before the preparation of fmal accounts make the financial report of firms not to show the effect of such policies. Also, government change these tax policies from time to time as it deem fit. So, when these changes are adverse, the finns seem to cushion the effect through tax avoidance or even evade the tax. Hence, this will lead to underreporting, concealment of income or gains and falsification of accounts and other documents. Based on the objectives of the study, research questions and hypothesis, a fitting • research methodology was adopted to suite the research work. Both primary and secondaty data were gotten so as to get the necessaty information needed. Primary data was obtained mainly through the administration of questionnaire. Secondary data was gotten from textbooks, journals, other articles and the website. Two measuring techniques were employed, one in analyzing the data collected and the other in testing the hypothesis. They are simple percentage frequency distribution and chi-square respectively. After the analysis of data was carried out, findings were made. The major ones are: 1. The knowledge of tax policies has significant effect on the information content of a firm's financial report. 2. Changes in the tax policies do affect a firm's financial reporting. 3. Government policies and • legislation have direct influence on tax matters. Recommendations were also made which include some of the following: 1. Change in tax policies should be controlled effectively to avoid unnecessary change so as to accord stability in reporting habits of fan's. 2. Since frequent changes increase the rate of tax avoidance and tax evasion practice, tax policies should be made stable at least for a reasonable period of time. 3. The knowledge of tax policies is very important particularly to the accountant who prepares the financial statement and reports. This is so because the effect of tax policies if identified would enable the finns annex opportunities form such policies