INTERNATIONAL FINANCIAL REPORTING STANDARDS AND IMPACT IN FINANCIAL REPORTING IN NIGERIA
ABSTRACT
This study examined international financial reporting standards and impact in financial reporting in Nigeria. In light of the empirical review and other discussions, a number of questions arose as to whether leverage exerts significant influence on firm’s decision to adopt international financial reporting standard; also to ascertain if profitability exerts a significant positive influence on firm’s decision to adopt international financial reporting standard; the study was to determine whether total asset significantly influences the decision of companies to adopt international financial reporting standard. Using the Ordinary Least Square (OLS) regression technique with the aid of computer software, the empirical findings revealed among other things that leverage exerts no significant positive influence on firm’s decision to adopt international financial reporting standard; that profitability exerts a significant positive influence on firm’s decision to adopt international financial reporting standard; and that total asset significantly influences the decision of companies to adopt international financial reporting standard. Recommendations were however made by the researcher.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
Background of Study                    
Statement of Research Problems            
Objective of the Study                    
Hypothesis of the Study                    
Scope of the Study                    
Relevance of the Study                
References                            
CHAPTER TWO: LITERATURE REVIEW
Introduction                            
International Financial Reporting Standards    
Impact of IFRS on Financial Reporting-Global Impact
Impact on Financial Reporting in Australia and
New Zealand                            
IFRS and the Nigerian Financial Reporting    
The Complexity and Structure of IFRS on
Financial Reporting in Nigeria                
The Technical Knowledge of IFRS by Preparers
and Auditors                            
The Impact of IFRS on Financial Reporting In Nigeria    
Accounting Knowledge of IFRS on Financial
Reporting in Nigeria                        
Prior Research and Expected Market Reaction        
Network Effects In Countries’ Adoption Of IFRS        
2.12    Conclusion                                
References                                
CHAPTER THREE: RESEARCH METHODOLOGY
Introduction                            
Research Design                            
Method/Sources of Data Collection                
The Population of the Study                    
The Sample Size                        
Method of Data Analysis                    
Model Specification                         
References                            
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
Introduction                            
Data Description                        
Binary Regression Results                        
Discussion of Regression Result                
Test of Hypotheses                            
CHAPTER FIVE:    SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION
Introduction                                
Summary of Findings                     
Conclusion                             
5.4    Recommendations                         
Bibliography                             
Appendix                             
CHAPTER ONE
INTRODUCTION
BACKGROUND OF STUDY
A financial reporting system supported by strong cooperate governance, couple with high quality standards and sound regulatory framework is the key to economic development. International consistency in accounting and auditing standards has become the demand of the global financial markets. With this, several countries have started adopting the International Financial Reporting Standards (IFRS). Though many other countries still base their local standards on IFRS. The trend towards these international standards is evidently growing and it is expected to result in greater comparability and disclosure of information.
    A study carried out by Ball (2005) and Deliotte & Touche, (2010), revealed that movement towards standardization of financial reporting are based on the need for “high quality transparent and comparable information.”  According to them this requires low capacity for material manipulations, accurate depiction of economic reality, and timeliness of financial statements. Companies will have to undergo extensive change and risk management to facilitate adoption. Also, there remains concerning complexities of IFRS requirements in terms of measurement and accounting as well as the amount of information to be disclosed. Such areas of concern are yet to be fully resolved as continuous effort are being made to improve the conflicts and contradictions.
    Eventually, the IFRS will be beneficial only after a consensus is achieved on how to apply such standards. Also, there are arguments that the IFRS is specifically suited to developed economies. As such, its implementation may be inappropriate to developing economies (Ball R. 2005). Unless these critical issues are resolved, the objectives of the IFRS towards a single accounting standard may be far from reach. The transition and conversion to IFRS entails tremendous amount of changes to be undertaken. The adoption must eventually be able to bridge the gap between the IFRS and companies’ perception as to what is relevant to its circumstances (Ball 2005): Making Accounting more International: why, How and How far will it go?
Predisposing factors for adoption of IFRS is based amongst others on the premises that higher quality and more comparable reporting and disclosure can have economy-wide benefits and positive externalities (Berger & Hann, 2007).
This study is an attempt to evaluate the Challenges of IFRS implementation in Nigeria. Hence the following in the light of the above is the statement of the research problems
STATEMENT OF RESEARCH PROBLEMS
It is a known fact that the focal point of a research effort is the research problems. This study attempted to identify the challenges of the implementation of the International Financial Reporting standards in Nigeria. The major challenge that is visible in the implementation of IFRS is the differences in our local laws regulating financial reporting and the provisions in the standards. By extension, the problem also cut across the political environment, the legal system and the overall accounting profession will be affected. To further amplify this challenges, the following questions are raised:
Does leverage exerts a positive influence on firm’s decision to adopt international financial reporting standard?
Does profitability exerts a positive influence on firm’s decision to adopt international financial reporting standard?
Does total asset influence the decision of companies to adopt international financial reporting standard?
OBJECTIVE OF THE STUDY
The objectives of the study are:
To find out if leverage exerts a positive influence on firm’s decision to adopt international financial reporting standard.
To ascertain whether profitability exerts a positive influence on firm’s decision to adopt international financial reporting standard.
To determine if total asset influences the decision of companies to adopt international financial reporting standard.
HYPOTHESIS OF THE STUDY
Ho:    Leverage exerts no significant, positive influence on firm’s decision to adopt international financial reporting standard.
    H1:    Leverage exerts a significant, positive influence on firm’s decision to adopt international financial reporting standard.
Ho:    Profitability exerts no significant positive influence on firm’s decision to adopt international financial reporting standard.
    H1:    Profitability exerts a significant positive influence on firm’s decision to adopt international financial reporting standard.
Ho:    Total asset do not significantly influences the decision of companies to adopt international financial reporting standard.
    H1:    Total asset significantly influences the decision of companies to adopt international financial reporting standard.
SCOPE OF THE STUDY
The research study focuses on international financial reporting standards and impact in financial reporting in Nigeria.
The population of the study is the entire quoted companies in Nigeria Stock Exchange.
The sample size will be restricted to five (5) selected companies quoted in the Nigeria Stock Exchange for the periods 2006 to 2010
Geographically, the study will be conducted in Benin City, Edo State.
RELEVANCE OF THE STUDY
This study will be of great relevance to the following groups, in the following ways:
Companies management will find this study useful to determine the impact IFRS will have on their financial report when fully implemented.
Regulators, such as security and Exchange Commission (SEC), Central Bank of Nigeria (CBN), Nigeria Deposit and Insurance Commission (NDIC), etc will find it useful in the formulation and implementation of policies.
Accounting firms/consultants will find the study useful in the dispatch of their service to clients.
Auditors of companies; internal and external, will find the study useful as it delimits the general framework of IFRS challenges on Nigeria financial system.
The public will also find the study useful as it will equip them on the possible effects of IFRS implementation on the investment and financial position.
Government and its parastatals will find the study useful as it will deal with the challenges of implementing IPSAS in Nigeria.
REFERENCES
Arunma, Oteh, (2010) “A Roadmap for Transforming the Nigeria Capital Markets” delivered at the SEC Media Center Lagos on Friday, 05 February 2010.
Ball R. (2005): “Making Accounting More International; Why, How and How far Will it Go” Journal of Applied Corporate Finance, vol. 8, 19-29.
Berger, P & R. Hann, (2007): Segment, Profitability and the Proprietary and Agency Cost of Disclosure, Working paper, University of Chicago
Deloitte &Touche, (2010): International Financial Reporting Standards for U.S Companies, Deloitte7 Touche LLP.
World Bank (2004): “Reports on the Observation and Codes on Accounting and Auditing in Nigeria.” Available at http://www.worldbank.org/IFAROSC.