Project Abstract

The Adoption of International Financial Reporting Standards (IFRS) has changed the way and manner in which financial statements are prepared, reported or presented. Globalization of capital markets requires a unified global accounting, reporting and disclosure set of standards. As a result of increasing volume of cross border capital flows and the growing number of foreign direct investments via mergers and acquisitions in the globalization era, the need for the harmonization of different practices in accounting and the acceptance of worldwide standards has arisen. The International Accounting Standards Board adopted the IFRS framework on 1 April, 2001, following which the standards were adopted by over 90 countries around the world. Nigeria’s growing prominence in the global business community necessitates that regulators and operators in the Nigerian Financial System take proactive steps to ensure a seamless migration to the IFRS Reporting Framework. The aim of this research is studying the impacts of IFRS adoption on financial statements. The explorative research uses a quantitative approach. The study examines the level of IFRS adoption in Nigeria and the merits and demerits of IFRS.

Project Overview

1     INTRODUCTION

This is the introductory part of the research work. The introductory part of this research material consists of the background of the study, it will also give a view of the objective of this study, it also includes the research problem, definition and limitation of study and an overall structure of the research work.

1.1     Background Information

Globalization of capital markets requires a unified global accounting, reporting and disclosure set of standards. As a result of increasing volume of cross border capital flows and the growing number of foreign direct investments via mergers and acquisitions in the globalization era, the need for the harmonization of different practices in accounting and the acceptance of worldwide standards has arisen. This worldwide standard is International financial reporting standards (IFRS) <http://ces.epoka.edu.al/icme/21.pdf>;

The International Accounting Standards Board adopted the IFRS framework on 1 April, 2001; the standards were adopted by over 90 countries around the world. International financial reporting standards (IFRS) was established and approved by the International Accounting Standards Board (IASB). The goals of the IFRS Foundation and the IASB is to develop, in the public interest, a single set of high-quality, understandable, enforceable and globally accepted financial reporting standards based upon clearly articulated principles. < http://www.ifrs.org>;

In pursuit of this goal, the IASB works in close cooperation with stakeholders around the world, including investors, national standard-setters, regulators, auditors, academics, and others who have an interest in the development of high-quality global standards.

Nigeria’s fast growth in the global business community necessitates that regulators and operators in the Nigerian financial system take proactive steps to ensure a seamless migration to the IFRS Reporting Framework.

On 28 July 2010, the Nigerian Federal Executive Council approved 1st January 2012 as the effective date for convergence of accounting standards in Nigeria with International Financial Reporting Standards (IFRS). The Council directed the Nigerian Accounting Standards Board (NASB), under the supervision of the Nigerian Federal Ministry of Commerce and Industry, to take further necessary actions to give effect to Councils’ approval.

On 3 September 2010, the Nigerian Accounting Standards Board (NASB) announced a staged implementation of IFRS, as follows: Publicly listed entities and significant public interest entities are expected to implement IFRS by 1 January 2012, Other public interest entities are expected to implement IFRS by 1 January 2013 and Small and medium-sized entities are expected to implement by 1 January 2014.

On 20 July 2011 a workshop was held in Abuja Nigeria and the workshop was about attracting investments into Nigeria. During the workshop, the Nigerian Federal Minister of Trade & Investment, Dr. Olusegun Aganga, announced the signing of the law necessary for Nigeria to implement International Financial Reporting Standards (IFRSs) in Nigeria.

On 28 July 2010, the Nigerian Federal Executive Council announced a ‘Road Map’ for Nigeria’s staged adoption of IFRS, commencing from 1 January 2012. The necessary law to enact the changes in the Financial Reporting Council of Nigeria Act 2011, had previously been passed by the Nigerian legislature, but had not been signed into law by the Nigerian President.

With the Nigerian President signing the act into law, the final processes for Nigeria’s adoption of IFRS can now be put in place. The effect of the law is to create a new Financial Reporting Council, incorporating and replacing the existing Nigerian Accounting Standards Board (NASB), which will issue and