The Impact of International Financial Reporting Standards Adoption on Global Acceptability of Financial Statements of Firms in Nigeria

Ayoola Azeez Olaoye

doi:10.7176/rjfa/11-9-07

Abstract

Nowadays business has become global activities. Nigeria is not left out of making international transactions. Before the introduction of the global standards called International Financial Reporting Standards (IFRS), different countries have developed their own national accounting standards or adopted that of other countries as a basis for financial reporting. Any information generated for economic decisions from financial statements prepared under different countries’ local accounting standards often not comparable. There exists a gap in literature on the studies of global acceptability of the financial statements of Nigerian firms after adopting IFRS in Nigeria.This study therefore, examines the impact of IFRS adoption on global acceptability of financial statements of firms in Nigeria after migration. A purposive sampling technique was adopted to draw a sample size of 96 from the study population of all the accountants and accounting lecturers in Osun State, Nigeria. Both primary and secondary data were used to elicit responses from the questionnaire administered. Multiple regression and Pearson correlation statistical tools were used to analysis the data generated for the study. The results from data analysis show the correlation of 0.850, 0.845, R value of 0880, R-square of 0.774 and the p-value of 0.00. The correlation results show that IFRS adoption has a strong positive relationship with global acceptability of financial statements. Since the p-value is less than 0.01 level of significant (0.00 <0.01), then null hypotheses should be rejected. Therefore, there is significant impact of IFRS adoption on global acceptability of financial statements of firms in Nigeria. This study concludes that by transmitting to IFRS, business organizations in Nigeria will enjoy full benefits of credible financial statements. This will ease their access to global capital markets thereby increasing their access to external capital and this will also attract foreign investors into this country which will serve as a basis for economic growth. This study therefore, recommends that the professional accounting bodies in Nigeria should make IFRS training a part of Mandatory Continuous Professional Education at reduced costs and the accounting lecturers should see the implementation of IFRS adoption as part of their professional and national responsibilities by embracing the teaching of students based on IFRS benchmarks in order to build human capacity that will support the production of global acceptable financial reports for businesses in Nigeria. Keywords : International Financial Reporting Standards, Financial Statements, Firms Global acceptability. DOI: 10.7176/RJFA/11-9-07 Publication date: May 31 st 2020

Highlights

The traditional and dominant focus for external corporate reporting in Nigeria has been to provide information about an organization’s financial performance alone (Onyali, Okafor & Onodi, 2015)
This study concludes that disclosure in form of Triple Bottom Line (TBL) accounting becomes a necessity to satisfy the interest of varying stakeholder groups and to place firms’ sustainability objective at the fore front of present day business
The performance information reported by firms should be linked with their stated intentions and their strategic processes for achieving sustainability as these would capture their impact in the society and boost their reputation

Summary

Introduction

The traditional and dominant focus for external corporate reporting in Nigeria has been to provide information about an organization’s financial (or economic) performance alone (Onyali, Okafor & Onodi, 2015). Triple Bottom Line (TBL) reporting is a concerted effort to incorporate economic, environmental and social considerations into a company’s performance evaluation and decision making processes (Faux, 2004; Wang & Lin, 2007). This type of reporting establishes principles by which a company should operate in order to concentrate on the total effect of their actions either positive or negative (Faux, 2004). For the past many years, corporate organizations all over the world have being reporting greater amounts of non-financial information about their operations because it has become a great concern that the natural resources on which the firms placed reliance are being consumed at a rate much faster than the level they can be replenished (Michael, Allan, & Penny, 2008)

Methods

Findings

Conclusion