The result of my interaction with most employees who provide support, legal advisory or administrative support to Executives in business sittings revealed that quite a number of them didn’t have any business acumen. I must confess that I am part of the statistics and sometimes feel like a fraud- how can I support strategy and policymakers, yet have poor business acumen?
I have the capacity to provide legal advisory and administrative support but I knew that was not enough. If Accounting, Statistics and other related courses (s) are not your primary area of study, you would understand the imposter syndrome I am dealing with.

I wanted to understand how to interpret and review financial statements but my mind and my brain would not budge! I wondered why and the conclusion I drew was that, as it is in every area of life a person is not familiar with, you would need to learn the rudimentary parts before you become an expert. So today, we journey through understanding Corporate Financial Accounting. It’s working and application.

For the newbies like myself, who want to review financial statements in the course of their work, could you please pause and ask yourself, why do need to understand the information provided in financial statements? How relevant is the information? Most times we erroneously assume that financial statement information is for directors, regulatory bodies and the finance department of our respective organisations. My exposure to Professor Owolabi’s class gave me a different perspective and changed my approach to the understanding of Corporate Finance Accounting.

The objective of interpreting and reviewing a financial statement can not be fully achieved unless you know why you review it and how relevant the information is to your course. When you review any financial statement, you do so as a user or a supplier of financial information. You may wonder how!

For every business, its financial statement provides insights into how the business is managed and this information helps different stakeholders make strategic decisions. Finance accounting information for the User provides an insight into a business’s past activities, current status and prospective returns and risks. For the Supplier of financial statement information, providing such information could be driven by a desire to lower its cost of financing, get exemptions and lower less obvious costs that may come from pressure groups and other contracting parties.

Who then are the users of financial statement information? How relevant is this information to these users? The following class of persons are recognised as users of finance accounting information:

1) Managers and Employees – For the purposes of negotiating compensation bonuses and future earnings, existing and potential employees seek to know the financial position of their companies and compare same with similar companies from the same industry.

2) Creditors and Suppliers- This category of users, such as banks and other financial institutions demand financial statement information to determine the terms of the credit facilities they provide their customers. As suppliers, the information provided in financial statements helps them determine the type of commitment they are willing to make with other contracting parties.

3) Investment Analyst – Financial statements, provide historical information about businesses and from those reports, projections could be made on the future earnings of the business. The information these analysts get, helps them make projections that provide recommendations on which stock prospective buyers can acquire.

4) Directors and Equity Holders- As would any investor, this category of users demand financial accounting information to assess the activities of the business and its profitability.

5) Regulators and Tax Agencies- Regulators such as the Nigerian Stock Exchange and the Securities and Exchange Commission demand for finance accounting to regulate the activities of businesses against antitrust activities and also to protect the general public.

We have other users like customers and strategic partners.

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