IMPEDIMENT TO THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARD IN THE
OIL AND GAS INDUSTRY IN NIGERIA
ABSTRACT
This study is motivated by a desire to examine impediment to adoption of international financial reporting standard in the Oil and Gas Industry. In light of the empirical review and other discussions, a number of questions arose as to whether management of oil and gas industry possesses sufficient information about the adoption of IFRS in Nigeria. Questionnaires were administered to some selected staff of the sampled Oil and Gas Industry operating in Nigeria. Data was collected and analyzed using the simple percentage, descriptive statistics and Z-test statistical tool. This study revealed among other things that management of oil and gas possess sufficient information about the adoption of IFRS in Nigeria and that management of oil and gas industries is prepared to the impediment of IFRS adoption. It is recommended that there should be more emphasis on awareness of IFRS adoption among oil and gas companies in Nigeria. This could be achieved by using the print media, radio and television. The publicity should be aimed at explaining the benefits the nation can derive by adopting IFRS.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
Background to the Study                            
Statement of the Research Problem                    
Objective of the Study                        
Research Hypothesis                            
Scope of the Study                            
Significance of the Study                            
Limitation of the Study                        
References                                
CHAPTER TWO: LITERATURE REVIEW
Adoption of International Financial Reporting Standards In Nigeria:
General Overview                             
Concept of International Financial Reporting Standard (IFRS)        
IFRS Adoption                                
Benefits of Uniform Accounting Standards                
Impediments to the Adoption of IFRS                
Prediction Model for Adoption of IFRS                
Network Effects in Countries’ Adoption of IFRS            
References                                
CHAPTER THREE: RESEARCH METHODOLOGY
Introduction                            
Research Design                        
Population                            
Sample Size                            
Sampling Technique                        
The Research Instrument                    
Method of Data Analysis                        
References                            
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION
4.1    Introduction                                
4.2    Descriptive Statistics                             
4.3    Test of Hypothesis                             
CHAPTER FIVE:    SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
5.1    Introduction                             
5.2    Summary of Findings                             
5.3    Conclusion                                 
5.5    Recommendations                         
Bibliography                             
Appendix                                 
 CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
A financial reporting system supported by strong governance, high quality standards, and sound regulatory frameworks is key to economic development indeed, the IFRS are accounting rules and standards issued by the International Accounting Standard Board (IASB). They purport to be a set of rules that ideally would apply equally to financial reporting by public companies worldwide. Predisposing factors for the adoption of International Financial Reporting Standard (IFRS) is based amongst others on the premise that higher quality and more comparable reporting and disclosure can have economy-wide benefits and positive externalities (Berger and Honn, 2007).
Studies by Deloitte and Touche (2006) and Ball (2005) reveal that movement towards standardization of financial reporting are based on the need for “high quality, transparent and comparable information”. This requires low capacity for managerial manipulation, timeliness of financial statement and accurate depiction of economic reality.
Proponent of IFRS argue that the standard reduce information cost to an economy particularly as capital flows and trade become more globalised, a single set of international standards will enhance comparability of financial information and should make the allocation of capital across border more efficient. The development and acceptance of international standards should also reduce compliance cost for corporations and improve audit quality (Leuz level of optimism that the global migration towards IFRS would most likely facilitate cross-border investment; integration of capital market and eases the constraints to investing by foreigners (Merton, 1987; Cooper and Kaplanis, 1986; Stulz, 1981 and Leuz, 2005).
However there are a number of studies that disagree with the assumption that changing the accounting standards alone can make corporate reporting more informative and comparable. Studies by Joes and Wysocki (2007) and Miller and Broadwhaw (2008) reveal that moving to a single set of accounting standards is not enough to produce comparability of reporting and facilitate investment flows even if the standard are strictly enforced. Reporting incentive still very systematically across firms and countries, according to the World Bank (2004), the structure of national economies, the legal framework, the tax system and the level of development of one accounting profession shape the extent to which these international standards can be adopted across countries.
In captioning the experience of most developing countries like Nigeria, the World Bank (2004) note that guidance is not provided on how to appropriately adopt international standard into national legislative and regulatory systems while still ensuring compatibility with the existing legal, economic and regulatory institutions which could contribute to the monitoring and enforcement of international standard. As currently drafted, international standard implicitly assume the existence of legal institutional and policy condition (“preconditions”) which are often undeveloped or absent in money countries. In Nigeria as in other developing transition economics, the evolution of the body of accounting rules and reporting standard is often as a result of  the economic circumstances, peculiar business environment, and legal framework amongst others.
However Arunmia Oteh (2010), noted at a press briefing on 5th February 2010 that; “The SEC is paying attention to make sure listed companies are IFRS compliant because compliance fosters good corporate standards by improving transparency and disclosure. While converting to IFRS can be a complex process those standards have important and positive implications for companies, it allows them to present their financial statement in the same basis as their foreign competitors, for investors, it offers better information for decision making. For regulatory bodies, it provides superior information for market participant in a disclosure based system”.
Though theoretically appealing, evidence from extant literature indicates that convergence is not an unchallenging process. It necessitates certain fundamental challenges, concerns and implication. Consequently, this study is an attempt to impediment to adoption of IFRS in the Oil and Gas Industry.
STATEMENT OF THE RESEARCH PROBLEM
The major challenges surrounding the uniform accounting standards is feasible given that countries differ considerably in almost all faces. The structure of national economies, the legal framework, the tax system, the political environment and the level of development of the auditor and all significant factors that influences the extent to which these international standards can be implemented across countries consequently, significant cost are likely to occur from transitioning to IFRS. For the purpose of this study, the following research questions were formulated:
Do management of oil and gas possess sufficient information about the adoption of IFRS in Nigeria?
Does IFRS adoption have a positive effect on the performance of oil and gas industries in Nigeria?
How prepared are the managements of oil and gas to the impediment of such adoption?
OBJECTIVE OF THE STUDY
The objective of this study is to evaluate the impediment to the adoption of IFRS in Oil and Gas Industry in Nigeria. The specific objectives are:
To find out if management of oil and gas possess sufficient information about the adoption of IFRS in Nigeria.
To determine if IFRS adoption have a positive effect on the performance of oil and gas industries in Nigeria.
To examine the level of preparedness of managements of oil and gas to the impediment of IFRS adoption.
RESEARCH HYPOTHESIS
H0:     Management of oil and gas does not possess sufficient information about the adoption of IFRS in Nigeria.
    H1:     Management of oil and gas does not possess sufficient information about the adoption of IFRS in Nigeria.
H0:     IFRS adoption does not have positive effect on the performance of oil and gas industries in Nigeria.
    H1:     IFRS adoption has positive effect on the performance of oil and gas industries in Nigeria.
H0:     Management of oil and gas are not prepared to the impediment of IFRS adoption.
    H1:     Management of oil and gas are prepared to the impediment of IFRS adoption.
SCOPE OF THE STUDY
This research work is an empirical study on the impediment to the adoption of IFRS in Oil and Gas Industry in Nigeria.
The population of the study is entire quoted oil and gas industry in the Nigeria Stock Exchange, while the sample is selected five oil and gas industry currently operating in Nigeria.
The length of period covered by the study was three years (2007 – 2011).
SIGNIFICANCE OF THE STUDY
This study will be relevance in the following ways:
Regulators such as Security and Exchange Commission (SEC), Central bank of Nigeria (CBN), etc, will find it as usable tool in the formulation of policy as this study does not only identify one key steps involve in the adoption, it also highlight it impediment of implementation as well as it implication.
Companies’ management will find it useful in making their decision to adopt the accounting policy as well as in preparation of financial statement.
Management of companies will appreciate the study as it expose the implications and impediments of implementation involves in adoption as well as its procedure.
General public will find it useful not only because it identify the management perception, it also examine the extent of adoption by Nigeria companies.
LIMITATION OF THE STUDY
The study is restricted to the impediment to adoption of IFRS in Oil and Gas Industry.
Time: the study was conducted and submitted within short period of time and this affect the scope of the study.
Geographical location: the study was restricted to selected auditors in Benin City.
Availability of data: this study was based on the data that the research could get.
 REFERENCES
Aruma, D. (2010); “A Roadmap for Transforming the Nigeria Capital market” delivered at the SEC media Center Press, Lagos.
Ball. R, (2005): ”Making Accounting more International Why, How and How far Will it Go”, Journal of Applied Corporate Finance, 8: 19-29.
Bradshaw, M. B. Bushee and G.Miller (2008):     “Will Harmonize Really Harmonize Accounting”. Journal of Auditing and Finance, 23:233-263.
Cooper, I. A. and Kaplanis, E. (1986) Costs of Crossborder Investment and International Equity Market Equilibrium, in Jeremy Edwards (ed.), Recent Advances in Corporate Finance, Cambridge University Press, Cambridge.