The difference between local and foreign banks using international accounting standard and statement of accounting standard (case of nigeria banks)

Project Abstract

<p> </p><p><strong>1. INTRODUCTION</strong></p><p>&nbsp;</p><p>The growth in the global trade economy and the globalization of businesses and financial market, financial information used and prepared according to a national accounting system may no longer satisfy the need of user whose decisions are more needed in the global market. The accounting information used in the local or domestic market may not even be sufficient for business and local investors.</p><p>&nbsp;</p><p>Due to the issues above, the adoption of new global environment and necessity for decision maker, accounting regulating authority have try to find out the solution that will allow for the improvement of financial accounting and its major outputs. The global initiative to have a general rule for accounting standard and practices has over the year been worked on.</p><p>&nbsp;</p><p>In order to satisfy and fulfill this objectives the International Accounting Standards Board (IASB) has prepared and published International Accounting Standards (IAS), which has become reference for the global community.</p><p>&nbsp;</p><p>In the last 15years, most of the discussions have focused on development of international accounting standards, and of recent the standards has been adopted by developed countries, such as United State, Canada and other European nations.</p><p>&nbsp;</p><p>Less discussion has focused on developing countries; this is because of the qualities of financial information and reporting, even with the pressure by some individuals, investors, banks and multinational companies and the willingness to attract foreign investment.</p><p>&nbsp;</p><p>Accounting standards are guidelines which define how companies have to display transactions and events in their financial statements and are not purely technical rules but they are the outcome of highly political processes (Horngren, 1973; Watts and Zimmerman, 1978; and Fogarty, Hussein, and Ketz, 1994). This means that there are different actors who come into contact with or are influenced by accounting standards – e.g. preparers, managers, accounting firms, auditors, financial analysts, employees. All these actors might have differing opinions and interests about what an accurate and useful accounting standard is and therefore might have different incentives in the production and diffusion of accounting standards (Zeff, 1978; Watts and Zimmerman, 1978, Giner, and Arce, 2004).</p><p>&nbsp;</p><p>Although, academics and practitioners agree on the importance of compliance with the requirements of accounting standards as an essential element of the financial reporting infrastructure, many scholars argue that the extent to which standards are enforced and violations prosecuted are as important as the standards themselves (Hossain and Adams, 1995; and Sunder 1997). Thus, the quality of financial information is a function of both the quality of accounting standards and the regulatory enforcement or corporate application of the standards (Kothari 2000; and Hop e, 2001). Absent of adequate enforcement, therefore renders the best accounting standards inconsequential. This is because if nobody takes action when rules are breached, the rules remain requirements only on paper. However, in some environments, firms behave towards “mandatory” requirements as if they were voluntary (Marston and Shrives 1996, Hodges, and Mellett, 2004); Giner, and Arce, 2004; and Cooper and Robson, 2005). Even though accounting policy disclosures are required in most countries as well as by IAS 1 (Saudagaran and Diga 1997), Frost and Ramin, (1997) document considerable variation in accounting policy disclosures within and across countries. The importance of compliance with the requirements of accounting standards is that it enhances transparency, accountability, standardization, uniformity and comparability which in turn enriches the quality of decision of the users and helps in proper allocation of resources in an economy. However, studies in the area as well as on the determinants of application of accounting standards have been few and mixed. For instance, regarding studies on application or compliance, two divergent schools exist.</p><p>&nbsp;</p> <br><p></p>

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