The Project File Details
The purpose of this study is to bring out issue and concepts of international financial reporting standard (IFRS) in general, its relationship to corporate business with specific reference to Nigeria Brewery Pic, Ibadan. The Objective of the study is to present the benefit of IFRS adoption and the problem of the study is the need for harmonization of financial statements and single of consistent high quality financial reporting standard gain wide spread acceptance amongst policies maker, standard setter and preparer. The need for quality and uniformity in the preparation and presentation of financial statement gave birth to (IFRS), The Directors, Board of Governors, Managers and every” stakeholder with more effective way of analyzing and reporting financial statement are the significance of the study. The potential benefits that Nigeria gain after IFRS adoption is to promote the compilation of the meaningful data on the performance of various reporting entities at public and private level in Nigeria. Why the challenges of IFRS are the level of Awareness and Accounting Education and Training also indicated in the study. The financial reporting regulation and regulator jn Nigeria are corporate Affair Commission (CAC) and the Centre Bank of Nigeria (CBN) and institute of chartered accountants of Nigeria (ICAN). The purpose of conducting an empirical research the used interview and direct observation are the methods of collecting data for this research work and the necessary techniques of data collection were through primary and secondary source in this study. The finding of this study is to analyze the data gathered from an unbiased questionnaire drafted and circulated for the purpose of the study. From the findings, we find out that adoption if International Financial Reporting standard has accordingly added better and meaningful understanding to the preparation of financial statement
Table of content
1.2 Background of the study
1.3 Statement of the problem
1.4 Objectives of the study
1.5 Research questions
1.6 Statement of Hypothesis
1.7 Scope of the study
1.8 Significance of the study
1.9 Justification of the study
1.10 Definitions of Terms
2.1 Conceptual Review
2.1.1 Development of accounting profession in Nigeria (Brief overview)
2.1.2 Legal and regulatory framework of accounting in Nigeria
2.2 Theoretical Review
2.1 The rational utility maximization theory
2.2.2 Pure impression management model
2.3 Empirical Review
2.3.1 Benefits of adopting IFRS in Nigeria
2.3.2 Challenges to IFRS adoption in Nigeria
2.3.3 Benefits and challenges of the implementation of IFRS to economic development
2.3.4 Requirements that will assist implementation of IFRS in Nigeria
2.4 Financial reporting regulations and regulators in Nigeria
2.4.1 Components of IFRS financial statements
2.4.2 Roadmap for the adoption of IFRS and the implications in Nigeria
2.4.3 Adoption statement of IFRS
2.4.4 Reasons for IFRS
3.0 Research Methodology
3.2 Area of Study
3.3 Population of the study
3.4 Research Design
3.5 Sample and Sampling technique
3.6 Data collection procedure
3.7 Methods of data Analysis
4.0 Presentation and Analysis of Data
4.1 Analysis of questionnaire
4.2 Testing of Hypothesis
5.0 Summary, Conclusion and Recommendation
An acceptable global high international quality financial reporting standard (IFRS) was initiated in 1973 when the international accounting standard committee (IASC) was formed by the professional bodies from different countries (such as United States of America, United Kingdom, Mexico, Australia, Germany. France, Canada, Japan and Netherlands) all over the world (Garuba and Donwa, 2011). This body was properly recognised in 2001 by the international accounting standards board (IASB), and as well developed accounting standards and related interpretations jointly referred to as the international financial reporting standards (IFRS).
The supremacy of IFRS further improved in September 2002, when the United States financial accounting standard board (FASB) and IASC under took to work closely based on their agreement to develop high quality compatible accounting standards that could be adopted for both domestic and cross border financial reporting. These bodies so far achieved their objectives and are far advanced in the IFRS – Us Generally Accepted Accounting principles (GAAP), Convergence Although, many developing counting who do not want to be left behind took a cue from the world major economics to either adapt, adopt or converge the IFRS Different countries on the other hand use different approaches in adopting IFRS based on their need and ability to adopt. (Azobi, 2010).
As part of plans to meet international standards, the federal Government has disclosed that new accountancy system, the international financial reporting standard (IFRS) will (Umoru and Isreal, 2010) take off in Nigeria on 1st January, 2012. In Nigeria, the government has taken the stand to involve all state holders including institution before it finally decided to adopt the IFRS on a gradual basis. Accounting to Ezeokoh (2011) as cited by Ejike (2012), financial reporting system has involved the full set of relationship between companies is board, the management its shareholders, and other stakeholders, including institution and the community in which it is located.
The board of directors is supposed to be accountable to shareholders in any company for effective monitoring hence there must be an independent relationship between the board and management. This has resulted to various rules, principles and regulation which have been issued in various countries in the area of accounting, and internal control and audit committees to checkmate the operation of corporate body and corporate fraud (different sectors) The objectives and importance of introducing IFRS according to Fowokan (2011) are:
To develop a single set of high quality understandable and enforceable global accounting standard that requires transparent and comparable information in financial statements.
However, the theoretical foundation underpinning Nigeria GAAP and IFRS are not all together similar, through, there will be increased responsibilities in setting accounting politician that fit business models, on the part of the professional accountants and the two who must also be ready to explain and justify these policies in the content of the IFRS framework. In order to achieve the above objectives, practical implementation of IFRS requires adequate technical capacity among preparers and unions of financial statements (auditors, accountants and regulatory authorities). The fact remains to impact knowledge one must be knowledgeable. Gamba and Dunura (2011) supporting the above view, affirmed that there is need to train the educators so as to be abreast with the IFRS. Hence, when they are well trained and equipped they will be able to impact knowledge to others.
Therefore, the government, institutions, professional and corporate bodies have a great role to play in this regard especially in subsidizing the training cost of the educators. Most of the professional bodies require tertiary education certificate as a prerequisite for enrolling for their professional examinations (NASB, 2010). The input and output of the tertiary education system have a huge impact on the success of IFRS implementation in Nigeria institutions. A study conducted by the NASB in 2008 on “Gap Analysis” of accounting curriculum content and statement of accounting curriculum content and statement of accounting standards in Nigeria institutions showed the low level of coverage of the local standard in tertiary institutions. In this regard, Tijike (2012) buttressed the above view by attesting that the Institute of Chartered Accountants of Nigeria (ICAN) braised the trail when it organized a one-day “interactive forum for accountants in education” free of charge in Lagos on the 8th of March, 2012. The Accountants, Auditors e.t.c. whether in companies or institutions are expected to abide by these rules and regulations, but most of them are deviants to these rules. Hence, some of these accountants and the management (managers) are deviants in reporting the financial statements based on time and fair views. It is glaring that to operate in the modern day world economy and to realize the full gains of international listing, no individual country can act in isolation in to financial reporting standards.
1.1 BACKGROUND OF THE STUDY
In everyday usage, the term international financial reporting standard has both narrow and broad meaning narrowly, IFRS refers to the new numbers series of pronouncements that the IASB is issuing, as district from the international accounting standards (IASS) Series issued by its predecessor. More broadly, IFRS refers to the entire body of IASB pronouncements, including standards and interpretations approved by the IASB and IASS and SIC interpretations approved by the predecessor International Accounting Standard committee.
Paragraph 7 of IAS 1 presentation of financial statements defines IFRS as comprising International financial reporting standards, international accounting standard IFRS international financial Reporting Interpretation committee and SIC Standing Interpretation Committee interpretation.
However, the definition of IFRS was amended after the names changes introduced by the revised IFRS foundation constitution in 2010.
Paragraph 8 of IAS 1 require that an entity whose financial statements comply with IFRS shall make an explicit and unreserved statement of such compliance in the notes. An entity shall not describe financial statements as complying with IFRS unless they comply with all the requirements of IFRS. when a standard or interpretation specifically applies to a transaction, other event or condition, the accountancy policies applied to those items shall be determined by applying the standard or interpretation and considering any relevant interpretation guidance issues by the IASB for the standard or interpretation (IAS 87).
1.3 STATEMENT OF THE PROBLEM
The need for harmonization of financial statement ad single set of consistent high quality financial reporting standard gained wide spread acceptance amongst policy makers, standards setters and preparers. The need for quality and uniformity in the preparation and presentation of financial statements gave birth to international financial reporting standards (IFRS). Before the adoption in Nigeria, there was legal and regulatory framework of accounting in respect to preparation of financial report in Nigeria. The company and allied matter Act (CAMA 1990) prescribe some format and content of companies financial statement disclosure requirement and auditing. It requires that the financial statement of all corporate organisations comply and adhere with the statement of accounting standards (SAS) issued from time to time by the Nigerian Accounting Standards board (NASB). This also requires that audit be carried out in accordance to what the general auditing standards.
Therefore, the adoption of IFRS in Nigeria was launched in September, 2010 by the minister of commerce and industry. This adoption was organized in such that the entire stakeholders that prepare and present financial statement use it by the beginning of 2014. The adoption was made in such a way that all the first tier companies listed on the stock exchange and are of public interest use it by 2012, all other company of public interest but not first tier are to adopt in 2013 and all small and medium standard exists because it serves as stewards to the owner of firm as ownership is divorced from controlling the activities of the business.
The management of organization seeks to establish rules and laws to guide how they relate to each other to at least reduce conflicts. This is the essence of regulations and management. Management is not effective if it is not supported by good and globally financial reporting standards.
Orjioke (2002) opined that public companies, institutions e.t.c. can achieve rapid growth and development if they are made to follow the regulation guiding financial reporting. To Emenike (1997) cited in Ejike (2002) research into the regulation of financial regulation in public related offices/companies has been scanty over the last decade. The problem of this study is to examine the extent of the adoption of IFRS in Nigeria which is key to economic transportation and growth.
1.4 OBJECTIVES OF THE STUDY
The main objective of the study is determining the extent to which adoption of International Financial Reporting Standards (IFRS) can enhance Financial Reporting System in Nigeria. The specific objectives include;
1.5 RESEARCH QUESTIONS
The following questions will guide the study;
1.6 STATEMENT OF HYPOTHESIS
The following hypothesis shall be tested in the course of the study.
H0: There is no significant benefit to be derived from the adoption of IFRS in Nigeria?
H1: There is significant benefit to be derived from the adoption of IFRS in Nigeria?
H0: There is no significant relationship between IFRS adoption and the profitability of manufacturing company?
H1: There is significant relationship between IFRS adoption and the profitability of manufacturing company?
1.7 SCOPE OF THE STUDY
The experiment is poised to study the problems and prospects of the adoption of International Financial Reporting Standards in Nigeria using Nigerian Breweries, Ibadan.
1.8 SIGNIFICANCE OF THE STUDY
The study shall be significant in the following ways:
1.9 JUSTIFICATION OF THE STUDY
This research work would form an avenue for providing information for both present and potential organisations on the need for the adoption of International Financial Reporting Standards (IFRS) as well as its uses and benefits to the organization. It will also find solutions to curb the challenges facing adoption of IFRS in Nigeria.
1.10 DEFINITIONS OF TERMS