THE EFFECTS OF IFRS ADOPTION AND FINANCIAL REPORTING PRACTICE IN NIGERIA


THE EFFECTS OF IFRS ADOPTION AND FINANCIAL REPORTING PRACTICE IN NIGERIA

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THE EFFECTS OF IFRS ADOPTION AND FINANCIAL REPORTING PRACTICE IN NIGERIA

CHAPTER ONE

INTRODUCTION

 

1.1  BACKGROUND OF THE STUDY (FBN)

International financial reporting standard (IFRS) are body of prescriptive rules and guidelines with global reach and appeal which provides direction and guidance on how business enterprises in a globalised world could achieved the goal of proper record keeping, transparency, uniformity, comparability  and enhancing public confidence in financial reporting (Tendeloo and vanstracten,2005). Their adoption represents an essential element to obtain an integrated, competitive and attractive beyond the European capital markets.

With the increasing internationalization of trading activities amongst countries of the world, necessitated by globalization, the Nigerian government was persuaded to approve a roadmap to introduce this set of uniform accounting standards initially for public interest entities (PIES).

Historically, the introduction of an acceptable global high quality financial reporting standards was initiated in 1973 when the international accounting standard committee (IASC) was formed by nine (9) professional bodies from different countries such as; united states of America, united kingdom, France, Canada, germane, Australia, Japan, Netherlands and Mexico (Garuba and Donwa, 2011). According to Ezeani and Oladele (2012), this body was properly recognized in 2001 and later transformed into the international accounting standard board (IASB) which developed accounting standards and related interpretations jointly referred to as the international financial reporting standards (IFRS).

The Quality Of Financial Reporting Is Indispensable To The Need Of Users Who Required Them For Investment And Other Decision Making Purposes (Fashina and Adegbite, 2014). Financial reports can only be regarded as useful if it represents the “economic substance” of an organization in terms of relevance, reliability, comparability, understandability, timeliness and simplified interpretation of accounting n umbers (Kenneth, 2012).

Before the IFRS adoption era, most countries had their own standards with local bodies responsible for developing and issuance of the local standards even if some of them align largely with the IAS. In this vein and in the Nigerian context, the Nigerian accounting standards board (NASB) was responsible for developing and issuing standards known as statements of accounting standards (SAS) and in the new dispensation, the body was renamed financial reporting council (FRC) of Nigeria as the regulatory body overseeing the adoption and implementation of (IFRS) Kenneth 2012.

Apparently, in a bid to take her own share of the benefits of using a set of accounting standards that not only allows for, but also enhance the comparability of financial reports across many geographical frontiers, on Wednesday,28 July,2010, the Nigerian federal executive council accepted the recommend of the committee on the roadmap to the adoption of IFRS in Nigeria, that it would be in the interest of the Nigerian economy for reporting entities in Nigeria to adopt globally accepted, high quality accounting standards by fully adopting the international financial reporting standard (IFRS) in a phased transition. (FIRS,2013; Fashina and Adegbite, 2014).

In December 2010, following the approval of the federal executive council, the Nigerian accounting standards board (NASB), (Now designated as financial reporting council of Nigeria), (FRCN) issued an implementation roadmap for Nigerian’s adoption of IFRS which set a January 2012 data for compliance for publicly quoted companies and banks in Nigeria.

Relatedly, according to Fashina and Adegbilte (2014), the Central Bank of Nigeria (CBN) and the Securities and Exchange Commission also adopted this date for compliance and has issued guidance compliance circular to ensure full implementation of IFRS in Nigeria. The council further directed the Nigerian Accounting Standards Board (NASB), under the supervision of the Nigerian Federal Ministry of Commerce and Industry, to take necessary actions to give effect to the council’s approval.

As part of plans to meet international standards the Federal Government has disclosed that new accounting system, the International Financial Reporting Standard (IFRS) should take off in Nigeria on 1st January, 2012, especially with Public Interest Entities. In Nigeria, the government has taken its stand to involve all stake holders including institution before it finally decided to adopt the IFRS on a gradual basis.

The adoption of IFRS has been argued in contemporary literature to offer numerous financial and no-financial benefits. ,it is therefore in this connection that Barth et al, (2008) agued that IFRS (and their predecessor IAS) constrain managerial discretion while Daske et al, (2008) submitted that IFRS impose a more comprehensive and highly detailed set of disclosure requirements than domestic accounting standards.

When disclosure is improved upon and managerial discretions, with respect to treatment of accounting transactions, are constrained, this arguably suggests that IFRS will improve accounting quality and engender bather financial reporting practices. Importantly, improved comparability is also one of the valve-adding characteristics of IFRS as contended by its advocates.

Many countries all over the world, including Nigeria, are now IFRS-compliant. As a corollary, it is now less costly for investors to compare and evaluate firms inside and outside industries and countries (Coving, Defond, and Hung, 2007). As Nigeria new belong to the league of IFRS-adopting countries with effect from 2012, perhaps persuaded by the gains is promises, it however remains to be convincingly empirically established the extent to which this set of accounting standards has impacted on financial reporting practices in Nigeria.

This study therefore, is an attempt to provide evidence on the impacts of IFRS on Financial Reporting Practices in Nigeria.

THE EFFECTS OF IFRS ADOPTION AND FINANCIAL REPORTING PRACTICE IN NIGERIA

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International financial reporting standard (IFRS) are body of prescriptive rules and guidelines with global reach and appeal which provides direction and guidance on how business enterprises in a globalised world could achieved the goal of proper record keeping, transparency, uniformity, comparability and enhancing public confidence in financial reporting (Tendeloo and vanstracten,2005). Their adoption represents an essential element to obtain an integrated, competitive and attractive beyond the European capital markets. With the increasing internationalization of trading activities amongst countries of the world, necessitated by globalization, the Nigerian government was persuaded to approve a roadmap to introduce this set of uniform accounting standards initially for public interest entities (PIES). Historically, the introduction of an acceptable global high quality financial reporting standards was initiated in 1973 when the international accounting standard committee (IASC) was formed by nine (9) professional bodies from different countries such as; united states of America, united kingdom, France, Canada, germane, Australia, Japan, Netherlands and Mexico (Garuba and Donwa, 2011). According to Ezeani and Oladele (2012), this body was properly recognized in 2001 and later transformed into the international accounting standard board (IASB) which developed accounting standards and related interpretations jointly referred to as the international financial reporting standar.. accounting project topics

THE EFFECTS OF IFRS ADOPTION AND FINANCIAL REPORTING PRACTICE IN NIGERIA

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  • TYPE : PROJECT MATERIAL
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  • ATTRIBUTE : Documentation Only
  • PAGES : 53 Pages
  • CHAPTERS : 1 - 5
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