The Nigerian Accountant 2012 - The Institute of Chartered ...

IFRS Adoption
The Challenges and Prospects
of Adopting the International
Financial Reporting Standards:
The Nigerian Experience
By AUSTIN UCHE NWEZE
In this era of scientific and technological evolution, the world has been reduced to a global village, thus necessitating the
adoption of a set of uniform accounting standards. Perhaps, this explains why all the various national accounting standards
are being collapsed and harmonised into one set known as International Financial Reporting Standards (IFRS). Obviously,
such a sweeping innovation must be fraught with some challenges and prospects. The study therefore is intended to survey
the challenges and prospects of adopting the IFRSs in the Nigerian. The method adopted is basically a comparative analysis
of IFRSs and SASs. The findings are quite revealing in that there is going to be a radical revolution in terms presentation
of Financial Statements, Provisioning for loan losses and impairment of assets, measurement and presentation of financial
instruments, employee benefits, deferred tax, intangible assets in the financial statements. The paper looked at the quantum
of benefits derivable from the adoption of IFRSs and commends Nigeria for adopting IFRS from January 2012.
Key Words: International Financial Reporting Standards, Financial Statements, Financial Instruments, Employee Benefits,
Intangible Assets.
The most populous country in Africa and the largest in
area of the West African states, Nigeria was an early
twentieth century colony that became an independent
nation in 1960. A country of great diversity because
of the many ethnic, linguistic, and religious groups that live
within its borders, Nigeria is also a country with a long past.
The history of the peoples that constitute the present state
dates back more than 2,000 years. The earliest archaeological
finds were of the Nok, who inhabited the central Jos Plateau
between the Niger and Benue rivers between 300 B.C. and 200
A.D. A number of states or kingdoms with which contemporary
ethnic groups can be identified existed before 1500. Of these,
the three dominant regional groups were the Hausa in the
northern kingdoms of the savanna, the Yoruba in the west, and
the Igbo in the south.
Nigeria, with an estimated population of 151.54 million, is
the largest market for goods and services in registered with
Corporate Affairs Commission under Part A. Of these, 26 are
licensed commercial banks, 49 are insurance companies and
2 are reinsurance companies. The Nigeria Stock Exchange has
216 listed companies with a combined market capitalisation of
5.4 trillion (about US$35 billion) as at January 13, 2010. Other
enterprises operating in the country are in excess of two million.
Despite the above statistics, the productive capacity is neither
satisfying the needs of the people nor increasing growth. A
key policy strategy is repositioning the Nigerian economy is
the attraction of foreign direct investments into the Nigerian
economy to provide investible funds. Foreign direct investments
in Nigeria have been declining from: from US$6.94 billion as at
September 30, 2009 primarily due to the perceptions of risk in
Nigeria.
The risk is grossly exaggerated because the federal
government has committed itself to programmes, including
scientific risk management approaches, which will ensure
that Nigerians offers good opportunity for investors to create
wealth. The perception of Nigeria as a risky country for the flow
THE NIGERIAN ACCOUNTANT 59
April/June, 2012