AN EXAMINATION OF PRACTICAL IMPLICATIONS OF INTERNATIONAL FINANCIAL REPORTING STANDARDS IN NIGERIA SINCE ITS ADOPTION A CASE STUDY OF SELECTED ACCOUNTING FIRMS IN KWARA STATE

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

In the past few years, many developed and developing countries have adopted International Financial Reporting Standards (IFRS). This is because, globalization of capital market requires a unified global accounting reporting and disclosure set of standards, as a result of increasing volume of cross border capital flows and the growing number of foreign direct investments via mergers and acquisition in the globalization era, the need for the harmonization of different practices in accounting and the acceptance of worldwide standards has arisen. This worldwide standard is International Financial Reporting Standards(IFRS, 2001). On 28th July 2010, the Nigerian Federal Executive Council approved 1stJanuary 2012 as the effective date for the convergence of accounting standards in Nigeria with IFRS. On 3rd September 2010, the Nigeria Accounting Standards Board (NASB) announced a staged implementation of IFRS, as follows: Publicly listed entities and significant public interest entities are expected to implement IFRS by 1st January 2012, other public interest entities are expected to implement IFRS by 1st January 2013 and Small and medium-sized are expected to implement by 1st January 2014. (IASplus, 2012) However, since the convergence of International Financial Reporting Standards(IFRS) in Nigeria, Nigeria is faced with a lot of implications toward its adoption (Akhidime, A.E. and Ekiomado, E.B, 2014).

This study intends to unveil the practical implications of the adoption of International Financial Reporting Standards (IFRS) with specific reference to Nigeria. 1.2 Problem Statement The implication of the adoption of International Financial Reporting Standards (IFRS) in Nigeria is a burning concern in accounting and financial literatures. Since Nigeria announced its decision to adopt IFRS, there have been concerns about the practical implications of applying the standards in preparation of financial statements. The accounting profession has long recognised the need for a harmonised accountancy framework (Harding 1999). Scholars have argued that the globalization of IFRS will result in a common language to financial statement prepared in different parts of the world. In the view of Nobes and Parker (2008), if a number of accountants from different countries or the same country are given the same transactions from which to prepare a financial statement they will not produce identical statement. Application of accounting standards is affected by unique cultural factor of the country in which the standards are applied (smith 2008). Scholars such as Saudagaran (2001) and Dunn(2002) have examined the obstacles to harmonization of accounting to include cultural barriers. As a consequence, financial reports across countries may not be comparable despite adoption of IFRS. Hence, this study intends to isolate the role of culture in practicability of IFRS adoption in Nigeria.