Abstract
This paper discusses about the adoption of International Financial Reporting Standards (IFRS) by the Nigerian financial institutions. Nigeria have been using domestic accounting standard (NGAAP) for banks and non-banks financial institutions known as Statement of Accounting Standards (SAS 10 Part 1 and SAS 15 Part 2) issued in 1990 and 1997 respectively for financial reporting. These domestic standards were adopted from International Accounting Standards (IAS 30) but have not been updated like IAS 30 as reported by the Report on Observance of Standard Codes (ROSC) of Nigeria in 2004 and 2011. The change in accounting regulations is as a result of the weaknesses of NGAAP and low disclosure requirements. IFRS reporting has more disclosures than NGAAP especially for financial institutions. Under NGAAP financial instruments have not been classified as in IFRS. For instance, financial instruments have been classified into four under IAS 39 as; (i) recognised fair value on gain or loss in profit or loss, (ii) are measured at amortised cost for investments held-to-maturity, (iii) measured at amortised cost for loans and receivables, (iv) measured at fair value gain or loss for available-for-sale financial assets recognised in other comprehensive income. Additionally, financial liabilities have been categories into two namely; (i) measured at amortised fair value on financial liabilities through profit or loss and, (ii) measured at amortised other liabilities. Now with the mandatory adoptions of reporting under IFRS by all listed financial institutions, will the accounting disclosures be more value relevant among Nigerian financial institutions? DOI: 10.5901/mjss.2015.v6n1p409
Highlights
This study looked at the NGGAP and International Financial Reporting Standards (IFRS) adoption on the value relevance of accounting information and the differences between the two regimes
The study examined financial institutions because they are mostly affected by changes and having more disclosures under IFRS
This article pursues to improve the literature as it examined the disclosure requirements under NGAAP and IFRS
Summary
Demand for relevant accounting disclosures by users is increasing due to the growing complexity of business environments worldwide. The accounting practice in the country is found to have suffered institutional weakness and non-compliance in regulations, rules and standards enforcement in financial institutions The avoidance of these full disclosures has been attributed to the drastic fall of the Nigerian stock market which caused crisis in the financial sector as reported by the ROSC in 2011. Markets have improved on the value relevance of accounting disclosures after adoption of IFRS (Kargin, 2013; Konstantious & Athanasios, 2011; Alali & Foote, 2012). The objective of this study is to determine the disclosures under NGAAP and IFRS after the adoption of new accounting reporting. This study will examine the major improvement on disclosures from the new accounting regulations (IFRS) in comparison to NGAAP reporting among Nigerian financial institutions.
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