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This study investigated the Challenges of International Financial Reporting Standards (IFRS) Adoption for listed companies in Nigeria. The emergence of IFRS was a major task for Accountants in Nigeria to transit to, and embrace. Both primary and secondary data were used in the study, a population of six (600) Accountants drawn from the pool of one hundred and thirty-eight (138) listed companies were used. A model was formulated using multiple Regression Analysis, with functional expression: LOA = f (AEA, TR, CIAAP). The following findings were made, accounting education and awareness, training resources, and cost of acquiring accounting packages, all have significant effects on the level of IFRS adoption. It is therefore recommended that, Tertiary institutions should be encouraged to integrate International Financial Reporting Standard modules into their programs, in order to produce better equipped graduates who are IFRS certified. This will go a long way to reduce the challenges when these graduates are eventually recruited. Lastly, IFRS adoption in listed companies in Nigeria should be further improved.


Title Page                                                                                                                                i

Declaration                                                                                                                             ii

Certification                                                                                                                            iii

Dedication                                                                                                                               iv

Acknowledgments                                                                                                                  v

Table of Contents                                                                                                                   vi

List of Tables                                                                                                                          vii

Abstract                                                                                                                                   viii



1.1       Background to the Study                                                                                            1

1.2       Statement of the Problem                                                                                           4

1.3       Objectives of the Study                                                                                              5

1.4       Research Questions                                                                                                    6

1.5       Research Hypotheses                                                                                                  6

1.6     The Scope of the Study                                                                                                7

1.7       Significance of the Study                                                                                           7

1.8       Operational Definition Terms                                                                                    8



2.1       Conceptual Framework                                                                                              10

2.1.1   Development of accounting profession in Nigeria.                                        18

2.1.2    History of Nigeria accounting standard board                                                           19

2.1.3    Legal and regulatory framework of accounting in Nigeria                                        23

2.1.4    Financial reporting and development of accounting                         

standard setting in Nigeria                                                                                          25

2.1.5    IFRS Legal and regulatory framework                                                                       27

2.1.6    The Nigerian accounting standards board Act 2003                                                  27

2.1.7    Compliance and monitoring regime                                                                           27

2.1.8    Some relevant laws and regulations                                                                           28

2.1.9    Financial reporting council of Nigeria                                                                      29


2.1.10  International financial reporting standards and

            Nigerian general accepted accounting principles                                                       30

2.1.11  The International financial reporting standards (IFRS) and U.S. GAAP             31       

2.1.12  Changes in nomenclature                                                                                          32

2.1.13  Changing from historical cost to fair value                                                               32

2.1.14  Changing from depreciation to deemed cost                                                             33

2.1.15  Provisioning for bank loan losses                                                                              33

2.1.16  Investment in securities                                                                                             33

2.1.17  Impairment                                                                                                                33

2.1.18 Transition adjustment                                                                                                  34

2.1.19  The Roles of regulatory bodies                                                                                 34

2.1.20  External auditors and other professional services providers                                                 34

2.1.21  Others emerging Issues                                                                                              35

2.1.22  Difference between IFRS and Nigerian GAAP                                                        35

2.1.23  Reasons for IFRS                                                                                                        36

2.1.24  Meaning of convergence with IFRS                                                                           42

2.1.25  Benefits of convergence to IFRS                                                                                42

2.1.26  Requirements that will assist implementation of IFRS in Nigeria                                    45

2.1.27  IFRS adoption process in Nigeria (The Road Map)                                                   45

2.1.28  Statement of adoption by federal government of Nigeria                                         46

2.1.29  Adoption statement                                                                                                   47

2.1.30  List of IFRSs and IASs                                                                                               49

2.1.31 Issues to pay attention in corporate governance                                                         52

2.1.32 Issues and implications of IFRS, DFI, financial statements and the economy         53

2.1.33  Is the adoption of IFRS Possible?                                                                              56

2.1.34  Benefits of adopting IFRS in Nigeria                                                                         56

2.1.35  Perceived benefits of IFRS                                                                                         58

2.1.36  The challenges of IFRS                                                                                              59

2.1.37  IFRS implementation, issues and challenges for emerging economies                   66

2.1.38 Key Drivers of IFRS                                                                                                    68

2.1.39 Experiences of some Countries that have implemented IFRS                                  70

2.1.40   IFRS and Corporate Governance                                                                              73

2. 1.41 Corporate governance regulatory environment in the past                                        74

2.1.42  Corporate governance regulatory environment in present times                                    77

2.2       Theoretical Framework                                                                                              79

2.2.1 The pure-impression-management model (PIMM) Theory of accounting

           postulated by Keppler in 1995                                                                         79

2.2.2   Theory of qualitative characteristic of financial reporting information                 79

2.2.3   Theory of accounting quality                                                                           80

2.3      Empirical Review                                                                                             80

2.4       Gap Filled/ Contribution to Knowledge                                                                     87




3.1       Research Design                                                                                                              89

3.2       Study Area                                                                                                                  89

3.3       Population of the Study                                                                                              89

3.2       Sample Size and Sampling Technique                                                                       90

3.5       Sources of Data                                                                                                          90

3.5.1    Primary Sources of Data                                                                                            90

3.6       Method of Data Collection and Administration                                                         90

3.7       Instrument of Validation and Reliability                                                                   91

3.8        Model Specification                                                                                                                        91


4.1 Presentation of Data                                                                                                         94

4.2 Test of Hypotheses                                                                                                           105

4.2.1 Hypothesis one                                                                                                              105

4.2.2 Hypothesis two                                                                                                              106

4.2.3 Hypothesis three                                                                                                                        107

4.2.4 Hypothesis four                                                                                                             108


5.1       Summary of Findings                                                                                                 109

5.2       Conclusion                                                                                                                  109

5.3       Recommendations                                                                                                      110

Reference                                                                                                                    119

Appendices                                                                                                                 125





4.1       Response to questionnaire                                                                                         94



4.2:      Demographic characteristics of respondents (n=483)                                                95

4.3:      Distribution of responses between cost of education and training

of accountants and IFRS adoption                                                                              97

4.4:      Distribution of responses between Integration IFRS Modules

            into tertiary institution programs and level of adoption                                             99

4.5:      Distribution of responses between Awareness of IFRS for preparers of

            financial statement and level of adoption                                                                   101


4.6       Distribution of responses between level of IFRS Adoption and quality

of financial statement                                                                                                 103


4.7       Regression results of Accounting Education and Awareness and level of

            IFRS adoption                                                                                                                                                             105


4.8        Regression results of training resources and level of IFRS adoption                                                          106

4.9       Regression results of cost implications in acquiring accounting packages

and level of IFRS adoption                                                                                         107











International Financial Reporting Standards (IFRS) are principally designed to serve as a common global language for business affairs so that accounts are understandable and comparable across international boundaries. The advent of technology has made it possible for companies to have international share holdings which make it possible for companies to have business dealings in several countries across the globe. Accounting is the language of business that enables communication among financial information users and providers. Prior to the advent of IFRS nations have their different accounting standards influenced by social, political, economic, and cultural inclinations of each country. (Lainez & Gasca 2006). In a bid to stem the tide IFRS came into being with a call on countries of the world to adopt this global accepted accounting standard. In 1st January, 2005 was the effective date European Union (EU) mandated a global convergence by companies whose shares are traded in EU stock exchange to prepare their consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) as adopted by EU. Australia followed suit on the same date; other countries such as Canada, Japan, Mexico, Philippines, Brazil, India, Pakistan, Singapore, South Africa and Egypt have all adopted IFRS (Garuba & Donwa 2011). Presently, over 120 countries are reported to have adopted or converged with IFRS. (IASB 2013).

From 1st July, 2012 IASB have 16 members drawn from a broad range of professional backgrounds and has liaison-responsibilities throughout the world. The IASB is an independent private sector body. It operates under the oversight of IFRS Foundation.  Before 1st April 2001 when IASB took over from International Accounting Standard Committee (IASC) countries and economic regional blocs, such as Europe, would not be swayed by the thought of converging to a single set of global accounting standards due to nationalistic approaches to accounting treatments and disclosures compared to a financial statement issued in other parts of the world, say, in Germany where German accounting standards were used. In other words, the “name” that was given to the set of accounting standards did not matter for several countries since their national standard setters strongly believed that their own (national) accounting standards were suitable for their needs and were compatible to other globally preferred accounting standards. Historically countries around the world have had their own national accounting standards (which some countries have treasured for whatever reason, most likely due to the pride of national sovereignty). However, with such a compulsion to be part of the globalization movement, wherein businesses across national boundaries are realizing that it is an astute business strategy to embrace the world as their  workplace and marketplace, having different rules (standards) of accounting for the purposes of reporting financial results would not help them at all (rather, it would serve as an impediment to smooth flows of information), therefore, businesses have realized that they need to talk to each other in a common language. Thus, there is an urgent need for a common set of global or even universal accounting and financial reporting standards that are understood, used and interpreted by different people around the world in the same manner, other than IFRS. International Financial Reporting Standards (IFRS) is now globally accepted accounting standards that meet the global capital markets. To wear a global outlook and acceptance convergence of IFRS and United States General Accepted Accounting Standards (US GAAP) took a positive turn in 2013 when the International Financial Reporting Standards Foundation selected Financial Accounting Standard Board (FASB) to represent United States interest in IASB standard setting process. (IASB News Letter Aug. 2015).

In Nigeria, adoption of IFRS was launched in September 2010, by the then Honorable Minister, Federal Ministry of Commerce and Industry, Senator Jubril Martins-Kuye (OFR). The adoption was organized such that all stakeholders should 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 statutory purposes by January 2013, and Small and Medium-sized Entities shall mandatorily adopt IFRS by January 2014. As part of the plans to meet International Standards, the Federal Government of Nigeria has disclosed that the new accounting system, the International Financial Reporting Standard (IFRS) will take off in Nigeria on 1st January, 2012. In Nigeria the government has taken its stand to involve all stakeholders including institutions before its finally decided to adopt the IFRS on a gradual basis. As of 1st January 2012 all listed companies in Nigeria had to adopt IFRS in order to prepare their financial statements. This decision was issued by the Nigerian government through the minister of trade and investment dated 28th July, 2010. It was aimed at enhancing the competitiveness of the Nigerian capital markets by a way of establishing a single set of globalized and homogeneous, “investor friendly oriented” and internationally recognized accounting standards.

The decision to adopt IFRS in a vast and important economic area such as Nigeria cannot be over-emphasized, but in doing that the government need to consider several factors that may affect the adoption of IFRS in developing countries (Zeff & Nobes 2007), it has been advocated by  Daskel, Hail, Leuz, Verdi (2008)  that the adoption of IFRS will lead to greater transparency and understandability, lower cost of capital to companies and higher share prices, reduce national standard-setting cost, facilitate international mobility of professional staff across national boundaries, increase investment opportunities among other things. Although that research stream concerning international accounting standards had gained international relevance in most of the developed nations of the world, IFRS adoption in Nigeria will offer a unique opportunity for researchers to explore possible ways of assessing the level of compliance and implementation issues of the subject matter.

A key policy strategy in repositioning the Nigeria economy is the attraction of Foreign Direct Investments into the economy to provide investible funds. Empirical evidence may have confirmed that a strong regulatory country, legal and technological infrastructure, which seem to be lacking in Nigeria at the moment remains a fundamental requirement for reaping the perceived benefits of IFRS adoption. This research work shall therefore critically examine the above issues including the challenges facing the adoption of IFRS in Nigeria with a view to making useful recommendations based on the findings that would emerge.   



The emergence of International Financial Reporting Standard (IFRS) in Nigeria accounting landscape posed multiple challenges. When a country switches from its domestic NGAAP to IFRS it affects various spectrum of its financial reporting system. The adoption of IFRS is more than an accounting exercise, there are challenges and issues envisaged in the implementation of IFRS in Nigeria. According to Abdulkadir (2012) the following are envisaged, cost of education and training, lack of awareness to stakeholders, legal and regulations issues etc. Among other things, the principal problem Nigeria may encounter in the process of implementation is the shortage of accountants and auditors who are technically competent to handle the process of IFRS. The time lag between decision and implementation date is short and not sufficient enough to raise the manpower required to apply competently the International Standard.

There are major differences between IFRS and NGAAP, Nigeria accounting practice is hinged on some existing laws such as Companies and Allied Matters Act (CAMA) 1990, Company Income Tax Act 2004, Bank and Other Financial Institution Act (BOFIA) 1991 etc. These provided guidelines on preparation of financial statements which IFRS does not recognize. There is need to harmonization or outright amendment of these laws. According to Bewaji (2012) there is need for the existing system to be remolded, there should be change of accounting policies to align with the provisions of IFRS.

There are obvious difficulties that Nigeria and Nigerian firms would have to grapple with and surmount for a successful implementation of IFRS. The big bang question shall be how prepared is Nigeria to successfully adopt the global accounting standards? Nigeria has not put the institutional structure to support the adoption of IFRS from the perspective of tertiary institution programs, preparers and users of financial reports.

Implementation of IFRS will involve radical revolution in terms of presentation of financial statements, especially, software problems, IFRS non- compatibility with local legislation and lack of proper awareness etc. (Adetoso & Oladejo 2013). These are compelling problems that needed to be addressed, hence the need to investigated through this kind of research, challenges to the adoption of the IFRS in listed companies in Nigeria. 



The main objective of this study is the Challenges to the adoption of International Financial Reporting Standards (IFRS) in listed companies in Nigeria.

The specific objectives which the study seeks to achieve are:

(i)             To determine the extent to which Accounting Education and Awareness affects the level of IFRS adoption among listed companies in Nigeria.

(ii)           To determine the extent to which Training Resources affects the level of IFRS adoption among listed companies in Nigeria.

(iii)         To determine the extent to which Cost implications in acquiring accounting packages affects the level of IFRS adoption among listed companies in Nigeria.


The questions raised on this are:

(i)             To what extent does Accounting Education and Awareness affects the level of IFRS adoption among listed companies in Nigeria?

(ii)           To what extent does Training Resources affects the level of IFRS adoption among listed companies in Nigeria?

(iii)         To what extent does Cost implications in acquiring accounting packages affects the level of IFRS adoption among listed companies in Nigeria?


This study is guided by the following hypotheses which are stated in null forms as follows:

(i)             Accounting Education and Awareness has no significant effects on the level of IFRS adoption among listed companies in Nigeria.

(ii)           Training Resources has no significant effects on the level of IFRS adoption among listed companies in Nigeria.

(iii)         Cost implications in acquiring accounting packages have no significant effects on the level of IFRS adoption among listed companies in Nigeria.


 It is practically impossible to include all the period of change SAS to IAS and to IFRS. Consequently, the scope of this study is limited 2005-2012 a period when the development process of International Financial Reporting Standards and to the period of its compulsory implementation and enforcement by the international community. The study is focused on Challenges to the adoption of International Financial Standards IFRS, in Listed Companies in Nigeria.


The benefits that will be accruable from this study cannot be over emphasized. The significance of the study is buttressed by the fact that the contribution of IFRS towards unification of global standards will go a long way to enhancing the quality of financial reporting, attraction of foreign direct investment as well as improvement of the country’s capital market.  This study is important to policy makers, stakeholders in private and public sectors, accountants, auditors as well as students of accountancy and other management sciences scholars.

The overriding benefits this study is expected to offer to the above groups are summarized hereunder:

Policy Makers: This study will give them the pure view of compilation of meaningful data on the performance of various reporting entities at all levels. A proper insight of how IFRS will enhance comparability, transparency, efficiency, and reliability will be gained.

Stakeholders: Assurance of useful and meaningful decision on investment portfolio will be easier. Investors can easily compare financial results of other entities for informed investment decision.

Public and Private Sector: This study will highlight how increased market liquidity; cross border listing will be facilitated. There will be easier access to external capital and direct foreign investment to multinationals and indigenous corporations.

Accountants and Auditors: It will afford them easy consolidation of financial statements and complying with reporting requirements.

Students: They will gain enhanced knowledge of global financial reporting standards, thereby making the tertiary institution IFRS compliant.

 It is hoped that this study will provide more reliable information that may add to the existing body of knowledge in the areas of accounting and finance and perhaps stimulate further research.



The following terms were defined in line with their usage in the study.

International financial reporting standard (IFRS): this is the body that replaced the Nigerian Statement of Accounting Standard (SAS) and the International Accounting Standards (IAS) and the other similar bodies regulating the practice of the accounting profession.

Convergence: this means to achieve harmony with IFRS. Convergence does not mean that IFRS should be adopted word-by-word. Convergence can be considered to mean to design and maintain national accounting standards in a way that financial statements are prepared in accordance with national standards drawing unreserved statement of compliance with IFRS(s).

Adoption: Adoption refers to harmonization or transformation to conform with IFRS provisions.

Single reporting:  convergence with IFRS eliminates multiple reporting such as Nigeria GAAP and IFRS.

Challenges: these are encumbrances, difficulties, short comings, impairment of the old order which are to be addressed by the new order.

Corporate governance: this addresses the issue of board composition, agency theory, ownership shareholders, stakeholders’ responsibilities, accountabilities, transparency and strategy in managing business organisations.

Emerging economies: these are previously classified third world countries as a result of their backwardness in sciences, technology, economies and general development but now reclassified as developing or emerging economies which Nigeria is inclusive.

Regulatory environment: this specifically has to do with the various laws, agencies and institutions that regulate the accounting activities such as training of accountants in accounting professions such as ICAN, ANAN,  CAMA, Government etc.



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