IMPEDIMENTS IN ADOPTING INTERNATIONAL FINANCIAL REPORTING STANDARD IN NIGERIA
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Couple of years back, what is now known as International Financial Reporting Standard (IFRS) witnessed worldwide spread debate. However, today scholars and researchers are devoting significant time and interest on the subject matter, this can be traced to the demands of globalization. According to Erahan and Beken (2008), opined that the globalization of capital market requires a single global accounting reporting and disclosure of set of standards. Today, the need for a unified standards is increasing in high demand by most economics in the world, arising from wide spread clamour by most entities for oversea capital, business combination including mergers and acquisition resulting to growing number of foreign direct investment among others. Although some commentators have said that adoption of IFRS will allow for International Comparison of Financial Statement, that may lead to reduction in the cost of capital, increased trade, increase access to foreign finance, as well as increased level of cross border merger and acquisition resulting to growing number of foreign direct investment among others.
Although some commentators have said that adoption of IFRS will allow for international comparison of financial statement, that may lead to reduction in the cost of capital, increased trade, increase access to foreign finance, as well as increased level of cross border merger and acquisition activities among others (Houston and Reinstein, 2001). However, some impediment are perceived to accompany adoption of IFRS as Melancon, and Eliot (2001) noted that notwithstanding the high quality of International Financial Reporting Standard (IFRS), there are so many impediments that may hind the adoption of IFRS in Nigeria, such as complicated nature of particular standards IFRS (including financial instruments) and susceptible to varied interpretations. This has tendencies of different countries applying International Financial Reporting Standard (IFRS) differently for similar transactions. Currently, over one hundred countries have adopted International Financial Reporting Standard (IFRS) and it is noted that by 2011 most countries of the world will either require or at least permit (IFRS) (ICAN Seminar, 2009). In light of the foregoing, this study is designed to assess the impediments or difficulties associated with International Financial Reporting with International Financial Reporting Standard (IFRS) adoption in Nigeria.
1.2 STATEMENT OF RESEARCH PROBLEM
There are impediments or problems involved in adopting International Financial Reporting Standards (IFRS).
1.3 OBJECTIVE OF THE STUDY
To find out the impediments in adopting (IFRS) International Financial Reporting Standards in Nigeria.
1.4 RESEARCH QUESTION
What are the impediments in adopting IFRS in Nigeria?
1.5 HYPOTHESIS
There are problems/impediments in the adoption of International Financial Reporting Standards (IFRS) in Nigeria.
1.6 SIGNIFICANCE OF THE STUDY
The research work predominantly concerned with analyzing the impediments or problems involved in adopting IFRS in Nigeria and to proffer a lasting solution to these impediments.
1.7 SCOPE OF STUDY
The scope of the study was limited to the two (2) federal ministries i.e. Federal Pay Office, Benin and Office of the Auditor-General for the Federation, Benin City because of the time limit and convenience.
1.8 LIMITATION OF STUDY
Some of the limitations to the study were;
Most respondents are not knowledgeable in IFRS
Improper filling of the questionnaire
Recovery of some of the questionnaire
Smallness of the sample size
Low response rate
1.9 OPERATIONAL DEFINITION OF TERMS
IFRS: Means International Financial Reporting Standards.
Globalization of capital market: It means Market where organizations or corporate(s) obtained loan facilities at reduced cost and with ease.