Abstract
The paper assesses the extent of mandatory compliance with international financial reporting standards 7 (IFRS7) by fourteen listed banks on the Nigerian stock exchange. Using a disclosure checklist of 132 mandatory disclosure requirements, the study covers a two year period of 2012 and 2013. Findings from the study reveal non-compliance with disclosure requirements. However, compliance is above average for the two years under study, an improvement is nonetheless recorded if the two years of the study are compared. Based on the result, it is recommended that monitoring and enforcement mechanisms of the Financial Reporting Council (FRC) especially on bank surveillance should be given urgent priority in view of the complex nature of banking and the need to mitigate banking crisis in Nigeria. Although Nigeria is only two years into the adoption process, banks in Nigeria can do better than what is reported in the current study. DOI: 10.5901/ajis.2015.v4n2p435
Highlights
The extent of compliance with disclosure requirements determines the usefulness of financial reporting figures in the eyes of investors in annual reports
International Financial Reporting Standards (IFRS) 7 financial instruments disclosure is chosen for the study because there is ample evidence of problems associated with derivative accounting across the globe the need for extra vigilance in Nigeria (Amoako & Asante, 2012; Chalmers, 2001)
The level of mandatory compliance with IFRS 7 disclosure requirements is measured using a mandatory disclosure index (MDI) which has been shown as a reliable measurement technique in compliance studies (Marston & Shrives, 1991) and is consistent with prior literatures (Abdullah, 2013; Hossain, 2014; Street & Gray, 2001; Glaum & Street, 2003)
Summary
The extent of compliance with disclosure requirements determines the usefulness of financial reporting figures in the eyes of investors in annual reports. Drawing from previous experiences of developed nations, this paper intends to examine compliance with IFRS 7 by listed banks in Nigeria a developing country, which mandatorily adopted the principles base framework since September 28, 2010 and started implementation on January 1, 2012 (Bala, 2013; Edogbanya & Kamardin, 2014) This is done with a view to finding whether or not financial statements of Nigerian listed banks in the early stage of adoption can be relied upon to provide the needed transparency and comparability in this globalised market (Spector, 2009).
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