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Department: Accounting
Topic: CHALLENGES OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) IMPLEMENTATION IN NIGERIA.
Project ID: ACC0024
Price:N5000 ($29)
No of Pages: 108 PAGES
Chapters: 1-5
Methodology: Chi-Square
References: YES
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CHALLENGES OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) IMPLEMENTATION IN NIGERIA.
ABSTRACT
This study focused on the Challenges of International Financial Reporting Standards (IFRS) Implementation in Nigeria, the benefit and challenges of IFRS bearing in mind the prevailing domestic legal and regulatory framework of accounting, awareness campaign and training of personnel. This study based on the data obtained from primary and secondary sources in the context of globalization of International Financial Reporting and the implementation of International Financial Reporting Standards (IFRS). Nigeria has embraced IFRS in order to participate in the benefits it offers, including attracting foreign direct investment, reduction of the cost of doing business, and across boarder listing. Recommendations were made to forestall such challenges which include strengthening education and training, establishment of an independent body to monitor and enforce accounting and auditing standards. For further studies, the researcher suggested that other researchers should expand their scope of the study to include compliance and checks in the prepared financial statements against IFRS-based financial requirements and also International Standards Setters’ Support (ISSS) towards effective speedy convergence.

CHAPTER ONE

 INTRODUCTION

1.1  Background of the study

Globalization of capital markets is an irreversible process, and there are many potential benefits to be gained from mutually recognized and prospected International Accounting Standards. The move towards developing an acceptable global high quality financial reporting standards started in 1973 when the International Accounting Standards Committee (IASC) was formed by professional accounting bodies from Canada, United States of America, United Kingdom, Germany, France, Netherlands, Australia, Mexico and Japan. The IASC was  to  formulate uniform and global accounting standards aimed at reducing the discrepancies in international accounting principles and reporting practices. In this light, the IASC was established and has actively been championing the uniformity and standardization of accounting principles for over two decades, Carson in Madawaki, (2012;152). In April 2001, the IASC was reorganized into International Accounting Standards Boards (IASB). Thenceforth, the IASB has updated the already existing International Accounting Standards and referred to them as International Financial Reporting Standards (IFRS).

IFRSs are a single set of high-quality, understandable standards for general purpose of financial reporting which are principles-based in contrast to the rules based approach. IFRS comprises of IAS (41); IFRSs (18); the Standing Interpretation Committee Statements, SICs (11); and the International Financial Reporting Issues Committee Statement, IFRICS (18), Azobu in Akhidime (2011:148). Much of the world is moving in the direction of International Financial Reporting Standards (IFRS). While some countries have been using these standards for decades, they are however new for transition economies like Nigeria. In Nigeria, implementation  of IFRS was launched in September 2010, by the Honorable Minister, Federal Ministry of Commerce and Industry, Senator Jubril Martins-Kuye(OFR). The adoption was organized such that all stakeholders use the IFRS by January 2014.  The adoption was scheduled to start with Public Listed Entities and Significant Public Interest Entities who are expected to adopt the IFRS by January 2012. All Other Public Interest Entities are expected to mandatorily adopt the IFRS for statutorily purposes by January 2013 and Small and Medium-Sized Entities shall mandatorily adopt IFRS by January 2014, Jubril M. K. & Michael, P. (2010). However, the successful adoption and implementation of these standards will remain a mirage in any country including Nigeria, Chamisa in Madawaki (2012:152). In the light of this therefore, this study focused on the process of adopting the IFRS in Nigeria as a developing economy, the benefits and challenges of IFRS, bearing in mind the prevailing domestic legal and regulatory framework of accountancy.

1.2  Statement of the problems

Statement of the problems of this research are as follows;

1.    Poor knowledge of IFRS procedures and implementation of the standards in Nigeria.

2.    Low level of awareness for preparers and users of financial statements, regulators, educators, auditors and other stakeholders.

3.    Accounting education and training among regulatory authorities and stakeholders on the practical implementation of IFRS constitutes a set back to the process.

4.    Effect of existing laws on the smooth transition process to IFRS.

5.    Difficulty in understanding the impact of IFRS on various sectors of the economy and their economic operations respectively.

1.3  Objective of study

It is the objectives of the study to;

1.                          Ascertain ways of enhancing proper knowledge and commitment of the preparers of financial statement on IFRS in Nigeria.

2.                           To examine the level of public awareness by regulators and other stakeholders in the use of these standards.

3.                          Determine the effect of accounting education and training among regulatory authorities and stakeholders in the practical implementation of IFRS in Nigeria.

4.                          Examine the influence of existing Nigeria laws on the smooth transition to IFRS.

5.                          Ascertain the impact of IFRS on various sectors of the economy and their respective economic operations 

1.4  Research Questions

1.   Is there proper knowledge and commitment among the regulatory authorities and the preparers of financial statements towards IFRS in Nigeria?

2.   What is the level of public awareness by regulators and other stakeholders on these standards?

3.   Is there significant effect of accounting education and training among regulatory authorities and stakeholders in the practical implementation of IFRS in Nigeria?

4.   What influence do existing Nigerian laws have on the smooth transition process to IFRS?

5.   What is the impact of the IFRS on various sectors of the economy.

1.5  Research Hypothesis

       Taking into consideration  the nature and  extent of the problems started so far, the researcher sees it necessary to formulate the following hypotheses:-

Ho1  There is no proper knowledge and commitment among the regulatory authorities and the preparers of financial statements towards IFRS in Nigeria.

H1    There is proper knowledge and commitment among the regulatory authorities and the preparers of financial statements towards IFRS in Nigeria.

Ho2  There is low level of public awareness by regulators and other stakeholders in the use of IFRS.

H2       There is high level of public awareness by regulators and other stakeholders on the use of IFRS.

Ho3    Accounting education and training among regulatory authorities and stakeholders have no significant effect in the practical implementation of IFRS in Nigeria.

H3       Accounting education and training among regulatory authorities and stakeholders have significant effect in the practical implementation of IFRS in Nigeria.

Ho4    There is no significant influence of existing Nigerian laws on the smooth transition process to IFRS.

H4    There is significant influence of the existing Nigerian laws on the smooth transition process to IFRS.

Ho5    IFRS has a negative impact on various sectors of the economy.

H5    IFRS has a positive impact on various sectors of the economy. 

1.6  The Scope (Delimitation) of the Study

           This study is strictly restricted to Nigerian economy. 

The reasons for this is because, International Financial Reporting Standards (IFRS) is a living study thus a contemporary issue in accounting development and as such, entities in Nigeria are  ongoing in the processes.

1.7  The significant of the study

       In today’s dynamic and globalization of accounting and financial information and interpretation, openness and transparency in annual reporting on an unprecedented scale may be inevitable with the  use of International Financial Reporting Standards (IFRS). Also, increasing demands for financial reporting accuracy and transparency, coupled with growing complexity and volume of  accounting standards and regulations all over the world, have put a premium on ongoing global convergence efforts and Nigeria’s commitment to adopt IFRS, Jubril, (2010).

       This study is of immense benefits apart from assurance of useful and meaningful decision on investment portfolio in the country, there would be attraction of Foreign Direct investment (FDI); Jubril (2010).

       The significance of this study would also create easier access to external capital; reduction in the cost of doing business across boarders by eliminating the need for supplementary information from Nigerian companies; easier regulation of financial information in the country; and enhance knowledge of global financial reporting standards in tertiary institutions amongst others, Jubril, (2012).

       This study also is significant to the Nigerian economy as the IFRS would enhance transparency in the conduct of business in the private and public sectors of the economy, Jubril,M.K & Michael , P (2010).

       Researchers in other developing nations which are  yet to adopt the policy may also find this study relevant in spite of technology, expertise and environmental challenges prevailing in the circumstance, than in more advanced nations as IFRS is a globalised and converged policy across the globe.

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