Abstract
The study focuses on the quality process of
International Financial Reporting Standard
(IFRS) on a developing economy, with particular reference to Nigeria. The research work is based
on the data obtained from literature survey and archival sources in the context
of the globalization of International Financial Reporting and the quality of
International Financial Reporting Standards (IFRS). The primary source of data
collection which consists of personal interview and questionnaire were used in
gathering data from respondents. It was found that 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 cross border
listing. It was concluded that implementing IFRS Nigeria will face challenges
including the development of a legal and regulatory framework, awareness
campaign, and training of personnel. It was recommended among others that
Nigeria should have their own version of IFRS if they can not adopt IFRS in
full just as Argentina and England.
TABLE OF CONTENTS
Title Page i
Certification ii
Dedication iii
Acknowledgments iv
Abstract v
Table of Contents vi
Chapter
One: Introduction 1
1.1
Background to the Study 1
1.2
Statement of Problem 4
1.3
Research Questions 4
1.4 Objectives of the Study 5
1.5
Statement of Hypotheses 5
1.6 Significance of the Study 6
1.7 Scope
of the Study 7
1.8
Limitations of the Study 7
1.9
Definition of Terms 8
Chapter
Two: Review of Related Literature 10
2.1
Introduction 10
2.2
Voluntary IFRS
Adoption and Accounting Quality 12
2.3
Mandatory IFRS Adoption and Accounting
Quality 15
2.4
Institutional
Setting and Hypothesis Development 17
2.5
Development of
Accounting Profession in Nigeria 27
2.6
Legal and
Regulatory Framework of Accounting in Nigeria 29
2.7
Key
Differences Between NG-GASSP and IFRS 30
2.8
IFRS Qui1ity Process
in Nigeria 31
2.9 How Adoption of IFRS will Impact IT Systems in
Nigeria 32
2.10
Quality
Statement 41
2.11 Benefits of Adopting IFRS in Nigeria 44
2.12
Challenges to
IFRS Quality in Nigeria 46
Chapter
Three: Research
Method and Design 51
3.1
Introduction 51
3.2 Research design 51
3.3
Description of the Population of the
Study 51
3.4 Sample Size 52
3.5
Sampling Techniques 52
3.6
Method of Data Collection 53
3.7
Method of data Presentation 53
3.8 Method of Data Analysis 54
Chapter
Four: Data Presentation,
Analysis
and
Interpretation
55
4.1
Introduction 55
4.2
Presentation of Data 56
4.3 Data Analysis 58
4.4
Hypothesis Testing 64
Chapter
Five: Summary of Findings, Conclusion
and
Recommendations 68
5.1
Introduction 68
5.2 Summary of Findings 69
5.3
Conclusion 69
5.4
Recommendation 70
References 72
Appendix I 78
Appendix II 79
CHAPTER ONE
INTRODUCTION
1.1
Background to the Study
There
are currently two main Schools of thought in the debate on International Financial
Reporting Standards (IFRS) and accounting harmonization or convergence. The proponents
argue that a single global set of accounting standards helps reduce information
asymmetry, lowers the cost of capital, and increases capital flow across
borders. The opponents argue that
the characteristics of local business
environments and institutional frameworks determine the form and contents of
accounting standards. Thus, accounting standards in two countries need not be
the same and the use of IFRS does not necessarily improve accounting quality (Khan
& Mayes, 2009). Since more and more firms and countries have adopted IFRS
or considered replacing their national standards with IFRS, in pace with the
rapid development of economic globalization and the worldwide integration of
capital markets since the 1990s, it is the right time to evaluate the impact of
IFRS on accounting quality for the early adopters (firms and Countries) of IFRS.
With the collapse of US Energy giant (Enron), WorldCom, etc. the accounting profession came under sharp scrutiny. This led a
disturbed and bewildered global public, questioning the accountant’s competence,
integrity and the existence of
standards in corporate governance. Countries that hitherto believed accounting standards were
impermeable found out that to
realize the full gains of cross border listing; no individual country can act alone in its financial reporting standards.
Convergence gives IFRS standards an
authority and credibility that cannot
be equated by any other set of standards. There is growing evidence that
the world economics are more interconnected and symbiotic than
anyone can really understand. Judging from the global financial crisis, ii is
obvious that nations that are truly desirous
of moving forward are now
aiming to flee their countries from the limits of the present
system of financial reporting standards.
Adams
(2006) noted that Nigeria is
part of’ this globalization, in recent times a number of Nigerian companies have raised capital form
international stock markets; others have established significant presence
in other jurisdictions. Also, a good number
of Nigerian entities hold the securities
of non-Nigerian issuers.
Therefore, for a better understanding and
appreciation of the risks and, consequently, making decisions
about the flow of’ economic capital, it makes sense that financial statements
prepared in Nigeria use global financial reporting benchmarks. With these
facts, the Federal Executive Council accepted the recommendation of the
Committee on the Roadmap to the Adoption of IFRS in Nigeria that it will be in
the interest of the Nigerian economy for reporting entities in Nigeria to adopt
globally accepted, high- quality accounting standards by fully converging
Nigerian a National Accounting Standards with International Financial Reporting
Standards (IFRS) (Blondal, 2004).
1.2
Statement of Problem
This
study is undertaken to examine the IFRS among accountants in Nigeria. For
the purpose of this research study problem will be put in question frame. These
are some of the research questions the study seeks to fine answers to:
1. Is it difficult to access IFRS with capital
flow across border?
2. Is IFRS important to Nigeria economy?
3. Is Nigeria accountant aware of the IFRS?
1.3
Research Questions
In
order to achieve the aim of this study the following questions require an
answer;
1. Will the adoption of IFRS enhance
efficiency of financial reporting in Public Sector?
2. Is
there any relationship between capital flow across borders and IFRS?
3. Is there any relationship between IFRS and financial
report in Nigeria
Economy?
4. Does Nigeria financial report has any
knowledge of IFRS?
1.4
Objectives of the Study
The
following are the objective of the study
1. To find out if the adoption of IFRS will
enhance efficiency of financial reporting in Public Sector.
2. To
ascertain if there is any relationship between capital flow across borders and IFRS.
3. To ascertain if there is any relationship
between IFRS and financial report in Nigeria Economy?
4. To find out if Nigeria financial report has any
knowledge of IFRS.
1.5
Statement of Hypotheses
Hypothesis
is a tentative conjectural
state of relationship between two or more variable. Dankwambo (2009) transition
to IPSAS and their impact on transparency it is often state the relationship
between independent and dependent variables. The following are hypotheses (null
hypothesis and alternative hypothesis) of the study:
Hypothesis
One
HO: Adoption of IFRS does not enhance efficiency of financial reporting in
the public sector.
HI: Adoption of IFRS enhances efficiency of financial reporting in the public
sector.
Hypothesis
Two
HO: There is no
relationship between capital flow across borders and IFRS.
HI:
There is a relationship between capital
flow across borders and IFRS
Hypothesis
Three
HO:
There is no relationship between IFRS
and financial report in Nigeria economy
HI:
There is relationship between IFRS and
financial reporting in Nigeria economy
Hypothesis
Four
HO: Nigeria
financial report has no knowledge of IFRS
HI: Nigeria financial report has
knowledge of IFRS
1.6 Significance of the Study
The
study will place emphasis on the importance of IFRS in accounting quality as a
basis for preparation of financial statement in Nigeria. The following will
benefit from the study
1.
The study will enlighten accountants on
the latest development in accounting profession.
2.
The study will attract potential
investors to the company.
3.
The study will also enable Nigeria
Accounting standard Board (NASB) to adjust to international standard.
The students, supervisor, government, and the general public will also benefit
from it.
1.7 Scope of the Study
The
study critically examines the influence of International Financial Reporting
Standards (IFRS) on financial reporting quality in Nigeria,
the study has a limited scope because to look at quality of IFRSs amongst accountants
in Nigeria.
The time is framed between 2008 and 2015 and a large sample size of 216 was
used during the course of the research for effectiveness.
1.8
Limitations of the Study
Studies
of this nature are bound to be limited by constraints in the course of the
finding. The followings were encountered.
1.
Data collection: Well established data
are not easily available.
2.
Sizeable quantity of information
obtained from papers were in organization and sometimes complex.
3.
Reluctance of the respondent to fill
the questionnaires.
1.9
Definition of Terms
Accrual
Accounting: Accrual
Accounting is an accounting methodology under which transactions are recognized
as the underlying economic events occurs, regardless of the timing of the
related cash receipts and payments (Khan and Mayes, 2009). Following this
methodology, revenue is recognized when income is earned, and expenses are
recognized when liabilities are incurred or resource consumed. Accrual bases
accounting match’s revenues to the time period in which they are incurred,
Blondal (2004). While it is more complex than cash basis accounting, this
contrast with the cash accounting basis under which revenues and expenditures
are recognized when cash is received and paid respectively.
Accounting
system: The transition to IFRS may require an entity to
undertake significant changes to their core financial systems. The extent of
these changes will depend on the current financial systems adopted by entities.
Significant changes in systems may lead to an increased risk in the reliability
of information produced from the systems.
Quality
statement: It is
in the best interest of the nation to adopt the IFRS. The transition should be
phased so that the objectives are achieved within the time-frame as outlined in
the roadmap.
IFRS:
IFRS a
set of international accounting standards stating how particular types of
transactions and other events should be reported in financial statements
Accounting
Quality: The objective of
financial reporting is to provide information about financial position,
performance and changes in financial position of an entity that is useful in
making economic decisions for a wide range of users, such as investors,
employees, lenders, suppliers government and public in general.
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