This study evaluated the effectiveness of accountants, and appraised the effectiveness of auditors in the implementation of IFRS in Nigeria. It also, determined the effectiveness of Financial Reporting Council of Nigeria (FRC) in monitoring the implementation of IFRS in Nigeria and evaluated the effectiveness of the accounting professional bodies (ICAN and ANAN) in facilitating the implementation of IFRS in Nigeria. The study has population size of 850, out of which a sample size of 369 was realized using Zigmund formular (1979). The instruments used for data collection were questionnaire and interview guide. A total of 369 copies of the questionnaire were distributed while 300 (81%) copies were returned and 69 (19%) were not returned. The survey research design was adopted for the study. Four hypotheses were tested using z-test, simple linear regression and chi-square statistical tools. The findings indicated that accountants have been effective in facilitating the implementation of IFRS in Nigeria, auditors have significantly facilitated the implementation of IFRS in Nigeria, the financial reporting council of Nigeria FRC has significantly monitored the implementation of IFRS in Nigeria, and professional accounting bodies (ICAN and ANAN) have significantly facilitated the implementation of the IFRS in Nigeria. The study recommended that accountants should be encouraged through provision of training grants for improved quality service delivery and update of knowledge as regards changes in accounting practice. Nigerian financial institutional infrastructure should be strengthened for enhanced effective delivery of their mandate. While FRC should be provided for in the national annual budget for effective implementation of her policies and programs, ICAN and ANAN should create a more enabling platform to increase the number of professionals they produced. From the results, it can be concluded that stakeholders are actively participating in timely and effective implementation of IFRS in Nigeria which account for the success recorded so far among listed companies in Nigeria who to greater extent have met the deadline for first time implementation of IFRS and date for first IFRS financial report.
- Background to the Study
Accounting is the language of business while financial reporting is the medium through which the language is communicated. Financial reporting follows a body of rules and regulations established by professional accounting bodies. In every country, these rules and regulations are known as Accounting Standards (Ivenso, 2013). Thus, Accounting Standards (AS) or rather National Accounting Standards (NAS) is the body of established accounting rules and regulations that are strictly adhered to in the preparation of financial statements. They are pronouncements by accounting bodies which formed the framework within which financial reports are prepared.
Globally, accounting and financial reporting are regulated by Generally Accepted Accounting Principles (GAAP). Generally Accepted Accounting Principles (GAAP) for accounting and financial reporting are, simply put, globally established and accepted accounting standards. The global GAAP that currently seek to unify accounting and financial reporting across the globe is the International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board (IASB). Ikedife (2013) states that, IFRS consists of standards issued by IASB; International Accounting Standards (IAS) issued by International Accounting Standards Committee (IASC) and Interpretations issued by the Standards Interpretations Committee (SIC). These International accounting standards state how particular transactions and other events should be reported in financial statements.
Accounting framework has been shaped by International Financial Reporting Standards (IFRS) to provide for recognition, measurement, presentation and disclosure requirements relating to transactions and events that are reflected in the financial statements. IFRS was developed in the year 2001 by the International Accounting Standard Board (IASB) in the public interest to provide a single set of high quality, understandable and uniform accounting standards (Ikefan and Akande, 2012). Users of financial statements would require sound understanding of financial statement but this is only possible if there is Generally Accepted Accounting Practice (GAAP). Adegbite(2011), states that with globalization of finance reporting gaining ground, the world will be able to exchange financial information in a meaningful and trustworthy manner.
Investors from all over the world rely upon financial statements before taking investment decisions. Different countries before now, adopt accounting treatments and disclosure patterns in respect of their economic environment. And as such, Inyama (2011) argues that it will surely create confusion among the users while interpreting financial statements. Adopting a single set of world-wide accounting standards avoid this situation and simplify accounting procedures by allowing a company to use one reporting language throughout. A single accounting standard will also provide investors and auditors with a cohesive view of finance performance and positions. Thus, an international accounting standard is especially important for large multinational companies (Alaribe, 2005).
The Nigerian Accounting Standards Board (NASB) now Financial Reporting Council of Nigeria (FRC) sets and regulates local accounting standards under the NASB Act of 2003. Although the NASB – issued standards had statutory backing but, the body itself operated without an enabling legal authority until the 2003 enactment of the NASB Act (Ososonya, 2002). There are many areas of accounting issues covered by IAS/IFRS that were not addressed by NASB. Also, some IAS – based national standards were effective at the time of issuance, but some IAS have since either been revised or withdrawn making the Nigerian Statement of Accounting Standards (SAS), incomplete as an authoritative guide to the preparation of financial statements due to lack of harmony between its SAS and IAS.
There is no local standard based on agriculture despite the prominence of agriculture sector in Nigeria. Ikefan and Akande (2012) state that the omission of a framework for preparation and presentation of financial statement is especially detrimental as there are several areas where no local standards exist, and the framework should guide the setting of relevant and reliable accounting policies in such circumstances. This situation underscores the need for adoption and adaptation of IFRS. The goal of IFRS is to provide a global framework for how companies prepare and disclose their financial statements. It provides general guidance for the preparation of financial statements, rather than setting rules for industry-specific reporting.
Ikedife (2013) observes that more than 150 countries throughout the world, including 27 European Union member states have implemented IFRS and converged their GAAP to IFRS. They now require or permit the use of IFRS developed by IASB. The use of IFRS as a universal financial reporting language is thus gaining moment. Nigeria has joined the League of Nations that approved IFRS conversion. She has joined the over 150 countries that require, permit or is converging with the goal of adopting IFRS. When the shift to IFRS occurs in Nigeria, there will be considerable demand for IFRS resources. For instance, corporate organizations and accounting professionals need to be trained for effective migration (Ojo, 2010).
Also, Ososonya (2002) expresses that the regulatory environment will need to adapt and adjust to IFRS. This requires that CAMA, 1990 and other relevant legislations need to be amended in line with IFRS. Stakeholders comprising investors, lenders, employees, auditors, audit committees, accountants, etc. needs to be IFRS well-educated and this will require considerable time, effort and money. Therefore, for effective and seamless adoption and adaptation of IFRS all relevant hands must be on deck.
According to Ivenso (2013) all the major stakeholders in IFRS have relevant role to play if the adoption and adaptation of IFRS will be effective and seamless in Nigeria. The slow pace of IFRS adoption and adaptation process in Nigeria may be suggestive of the fact that the institutional infrastructure and other stakeholders have not done the needful in the adoption process. It has been argued that for effective conversion and convergence with IFRS, the stakeholders will play their respective role to the hilt (McDougal, 2011). It is against this background that this study sets out to examine the role of the various stakeholders in the expeditious and seamless adoption and adaptation of IFRS in Nigeria.