Deming stated that tthe outgrowth of IFRS has coincided with the demand of their usage by the European Union. Get downing in 2005, virtually all public-held companies listed on stock exchanges in the European Union are required to follow IFRS. Many little or developing states have turned to IFRS as their national GAAP, as they became the prevailing planetary accounting criterions.
The lifting growing in international trade, cross boundary line fiscal minutess and investings which necessarily involves the readying and presentation of accounting studies that is utile across assorted national boundary lines, has necessitated the acceptance of IFRS by both the developed and developing states ( E.Okpala, 2012 ) . Accounting criterions conformity and harmonization constitute an of import issue as a company can happen it hard to follow different accounting criterions for the same concern construction in different states. Differences in accounting criterions could take to extra cost of fiscal describing if they are non managed good. For illustration, net income could be transformed to losingss under different accounting criterions ( Tripathi and Gupta, 2009 ) .
Harmonizing to Ballas et Al ( 2010 ) the argument on international harmonization of accounting criterions started in the sixtiess and legion studies of the extended literature on harmonization and IFRS execution have been written over the old ages. However, the twelvemonth 2005 heralded a new epoch in fiscal coverage as many states adopted International Financial Reporting Standards ( IFRS ) for the first clip. As it is realised, the globalization tendency affects the manner that houses worldwide report their fiscal minutess. Accounting criterions globalization significantly changes the reported net incomes and reported fiscal place of many houses and public sector entities ( Godfrey & A ; Chalmers, 2007, p.1 ) . To butress this point, A.Bhimani ( 2008 ) wrote that the growing in concern activities globally with inter-organisational linkages, cross-national fiscal inter-dependencies and flows going progressively complex besides facilitated the globalization of IFRS. He added that given the extensively unsure, uneven and invariably germinating nature of planetary concern alterations, the propensity of using judgement in measuring fiscal public presentation and place instead than trusting on the application of pre-defined regulations continued to accomplish wider credence.
VCH ( 2011 ) stated that globalization of capital market has led to a crisp addition in the importance of international fiscal coverage ordinances in recent old ages. Accountants worldwide no longer speak national linguistic communications but international one linguistic communication. The common linguistic communication of comptrollers is ‘International Financial Reporting Standrads ( IFRS ) ‘ of The International Accounting Standard Board ( IASB ) . Many developing states and states with economic systems in passage strive to mobilise fiscal resources from domestic and international beginnings to accomplish their societal and economic development ends. The handiness of relevant information on possible investing marks has a bearing on attempt to call up investings for funding economic and societal development. Such information plays an of import function in doing critical investing determinations and carry oning hazard assesment. It besides contributes to better investors ‘ assurance and decreased cost of capital ( Practical Execution of International Financial Reporting Standards: Lesson Learned, 2008 ) . In order to ease the free flow of resources for economical growing and transparence in the country of finance globally led to the Internationalisation of IFRS. Walton ( 2011 ) argued that one of the grounds for the globalization of IFRS is non because of transparence entirely but that authoritiess, companies and stock exchanges are by and large rather loath to pass any money on explicating accounting criterions. Consequently, they are in normal times rather happy to utilize a ‘free ‘ import of reputable criterions.
In simple footings, the definition of cardinal footings in this research is considered below:
International fiscal coverage criterions ( IFRS ) are a set of accounting criterions developed by the International Accounting Standards Board ( IASB ) that is going the planetary criterion for the readying of public company fiscal statements. ( AICPA IFRS Resources, 2012 )
Adoption of IFRS means that IFRS have replaced national accounting criterions and demands as the footing for fixing and showing group fiscal statements for listed companies ( Mirza & A ; Holt 2011, p.3 ) . In this context, it means replacing Nigerian GAAP with IFRS. Adopting IFRS involves doing a figure of determinations which have a important impact on the company ‘s fiscal place and public presentation every bit good as on systems, procedures and related controls ( Deloitte, 2011 )
Fiscal establishments are administrations whose chief map is pull offing the fiscal assets of concern concerns and persons ( Gup, 2008, p.1 ) . Fiscal establishments as defined by Jorion ( 2009, p.865 ) are:
Commercial Bankss, whose primary map is to keep clients ‘ sedimentation and to widen recognition to concerns, families or authorities.
Securities houses, whose primary map is to intercede in securities markets.These include investing Bankss, which specialise in the initial sale of securities in the primary market, and agent traders whose primary map is to help in the trading of securities in the secondary markets.
Insurance companies, which provide belongings and casualty or life insurance coverage.
Wood & A ; Sangster ( 2008, p.653 ) defined International Accounting Standard Board as the organic structure responsible for publishing International Financial Reporting Standards and International Accounting Standards ( the old name used ) .
2.3 The Drive for IFRS by Nigerian Financial Institutions
Bruce ( 2007 ) explained that the procedure of traveling to IFRS has non merely been a series of proficient accounting alterations. It has been a cultural transmutation every bit much as an accounting one. In many topographic points, including Nigeria, capital market coverage did n’t be before. The figures were produced for a tax-based system, for illustration. The alterations have been what precisely the capital markets needed. Ojo ( 2012 ) pointed out that in a move aimed at incorporating the banking system into the planetary best patterns in fiscal coverage and revelation, Nigeria ‘s cardinal bank ( CBN ) , commenced partial acceptance of the International Financial Reporting Standards ( IFRS ) in the banking system- the move harmonizing to CBN, being aimed at heightening market subject and cut downing uncertainnesss which limit the hazard of gratuitous contagious disease.
Terzungwe ( 2012 ) stated that another drive factor for the acceptance of IFRS by Nigerian Financial Institutions is because most of these establishments have raised capital from international stock markets and have established their presence in other states of the universe, while Nigerians hold securities of non Nigerian issuers. He added that universe economic systems are interconnected and states are wishful of traveling frontward by liberating themselves from the bounds of the present system of fiscal coverage. To confirm this, S.Rich et Al. ( 2010, p.785 ) pointed out that concern is going an progressively planetary activity as companies conduct operations across national boundaries. Not merely are companies prosecuting in international minutess, companies are progressively seeking capital from foreing stock exchanges. They farther stated that due to a assortment of factors ( e.g cultural differences, differences in legal system ) the historical development of accounting criterions on a country-by-country footing has led to considerable diverseness in fiscal accounting patterns. To ease the behavior of concern in an international environment, there has been increasing involvement in the development of International accounting criterions. Beko ( 2011 ) emphasised the fact that International investors need entree to fiscal information based on incorporate accounting criterions and processs. Investors invariably face economic picks that require a comparing of fiscal information. Without harmonization in the implicit in methodological analysis of fiscal studies, existent economic differences can non be separated from alternate accounting criterions and processs.
Ballas et Al ( 2010 ) mentioned that the demand for better administration, stewardship of concern, improved fiscal coverage and more efficient fiscal market has been an indispensable driver for alteration of the local statement of accounting criterion to international fiscal describing criterion in Nigeria. Oghojafor et al. , ( 2010 ) buttressed the point that the crisis in the banking sector is a clear manifestation of hapless cooperate administration patterns, unequal public presentation orientation, deficiency of answerability in the fiscal sector. In order to turn to these issues and guarantee safety of depositors ‘ fund, the demand for a more dependable and crystalline accounting criterions was recommended. Bolt-Lee and Smith ( 2009 ) added that standard scene at the national degree has been filled with political contention in recent old ages. A transportation of the standard scene procedure to an entity external to national boundaries could extinguish what people in the regulative and political sphere respect as a mussy procedure at the national degree. They farther suggest that outsourcing the scene of accounting criterions to a individual private bureau appears to be rational, lower cost option, which reduces economic and political cost for single states every bit long as they retain residuary determination rights sing International fiscal coverage criterions acceptance.
2.3.1 Recent Banking Sector Crisis In Nigeria
In Nigeria, the banking sector is an of import portion of the fiscal system. The banking sector dominates the Nigerian fiscal system as it accounts for approximately 90 % of the entire assets in the system and approximately 65 % of market capitalization of the Nigerian Stock exchange ( O.Alabede, 2012 ) . The banking sector is strategic to Nigeria ‘s economic prosperity and the crisis has precipitated some terror and deep concerns about the Nigerian economic system ( Voice of America, 2009 ) .This denotes that the crisis experienced in the banking sector had a important impact on Nigerian fiscal system. This crisis is discussed below.
Sanusi ( 2010 ) , the Governor of Central Bank Of Nigeria stated that the banking sector crisis was as a consequence of some of the factors stated below:
The deficiency of effectual corporate administration at Bankss was so a premier factor lending to the fiscal crisis. Consolidation created bigger Bankss but failed to turn to the cardinal defects in corporate administration in many of these Bankss. Governance malpractice within Bankss, unrestrained at consolidation, became a manner of life in big parts of the sector, enriching a few at the disbursal of many depositors and investors.
A deficiency of investor and consumer complexness besides contributed to the crisis by neglecting to oblige market subject and leting Bankss to take advantage of consumers. Many new investors were nescient of the hazards they were taking and consumers were frequently subjected to hapless service and sometimes concealed fees.
It was reported in the BBC News ( 2009 ) that 10 Bankss were audited by the Central Bank of Nigeria and merely half of them got the base on balls grade. The others were said to hold fallen far short of the prudent and crystalline direction required by jurisprudence and by public trust.
Akinpelu ( 2012, p.253 ) stated that after the national banking crisis, It appeared everything had resumed back to normal in the Nigerian banking sector in 2008. However, towards the terminal of that twelvemonth, the universe economic system entered into recession following the fiscal meltdown that started with the subprime mortgage crisis in the United States of America and other economic calamity in Europe and other parts of the universe. He stated that the crisis had led to the prostration of many Bankss and other fiscal establishments, and even rendered a figure of states bankrupt. During this epoch, it appeared banking system in Nigeria had weathered the storms until some Bankss began to demo marks of failure due to immense concentration in their exposure to certain sectors ( capital market, and oil and gas being the most outstanding 1s ) , and a general failing in hazard direction and corporate administration.
2.3.2 Roadmap to IFRS acceptance in Nigeria
Ayuba ( 2012 ) pointed out that the impact of IFRS accounting policies determinations of a parent on the subordinate, informations gaining control for accounting and direction coverage, handiness of proficient resources, acquisitions and temperaments, executive compensation computations and the footing of incentive wage, debt compacts and possible impact of IFRS-reported consequences, etc were considered before geting at the route map. Ogunwale ( 2011 ) added that the application of local accounting techniques in fixing fiscal statements does non ever ensue in edifice of proper accounting criterions, merely because similar minutess and events are non likewise reported or treated in similar mode, this necessitated the thought of fixing fiscal statement in a modernized manner.
Since globalization is an inevitable procedure and since high quality criterions are important to procuring and reconstructing the trust reposed by investors in fiscal and non fiscal information ( besides playing a important function in lending to a state ‘s economic growing and development ) led to the acceptance of IFRS in Nigeria ( Marianne, 2012 ) . It is predicted that the fiscal system be robust plenty to prolong one of the universe ‘s 20 largest economic systems. This is noted in the Financial System Strategy 2020 ( FSS2020 ) , in which the Central Bank of Nigeria brought together stakeholders in the fiscal system to craft the common vision and route map ( The African Economy, 2013 ) .
Harmonizing to the Minister of Federal Ministry of Commerce and Industry, Martins-Kuye ( 2010 ) mentioned that the Roadmap lineations specific mileposts that if realised, could take to the acceptance of IFRS in three stages as follows:
“ Phase 1: Publicly listed Entities and Significant Public Interest Entities
Publicly listed Entities and Significant Public Interest Entities are to fix their fiscal statements utilizing applicable IFRS by January 1, 2012. The pick of January 1, 2012 is anchored on the demand to efficaciously pass through to IFRS over a three twelvemonth period. Any entity that starts readying for pass throughing would necessitate to change over its shutting balances at December 2010 to IFRS-based figures which so become the opening balances as at January 1, 2011 for IFRS-based fiscal statements as at December 31, 2011. This provides opening balances for January 1, 2012 which is the first IFRS full fiscal statements as at December 31, 2012 ( with 2011 as comparative twelvemonth ) .
A Phase 2: Other Public Interest Entities
All other public involvement entities are expected to mandatorily follow IFRS, for statutory intents, by January 1, 2013.
A Phase 3: Small and Medium-sized Entities ( SMEs )
IFRS for SMEs shall compulsorily be adopted as at January 1, 2014. This means that all Small and Medium-sized Entities in Nigeria will statutorily be required to publish IFRS based fiscal statements for the twelvemonth ended December 31, 2014. Entities that do non run into the IFRS for SME ‘s standards shall describe utilizing Small and Medium-sized Entities Guidelines on Accounting ( SMEGA ) Level 3 issued by the United Nations Conference on Trade and Development ( UNCTAD ) . ”
The roadmap is shown in the diagram below:
Figure Roadmap to acceptance of IFRS in Nigeria
Beginning: Institute of hired comptrollers of Nigeria
2.4 Formulation of International Financial Reporting Standards
The IASB has a formal due procedure which any issue has to travel through earlier going an accounting criterion. Harmonizing to J.Epstein and Jermakowicsz ( 2010, p.7-8 ) the procedure normally involves the five stairss below:
1 ) Discussion of a paper sketching the chief issues ;
2 ) Preparation of an exposure Draft that incorporates the cautious determinations taken by the Board-during which process many of these are re-debated, sometimes several times ;
3 ) Publication of the exposure Draft
4 ) Analysis of remarks received on the exposure Draft ;
5 ) Argument and issue of the concluding criterion, accompanied by application counsel and a papers puting out the footing for decision ( the grounds why IASB rejected some solutions and preferable others ) .
Final ballots on the exposure bill of exchange and the concluding criterions are carried out in secret, but otherwise the procedure is rather frequently, with foreigners able to confer with undertaking sum-ups on the IASB web site and go to Board meetings if they wish. Mackenzie et al. , ( 2012 ) added that the standard scene procedure is more involved in pattern than in theory. They farther mentioned that in theory, an internal procedure is involved where the staff proposes solution to a bill of exchange paper, and IASB either accepts or rejects them ; in pattern, the procedure is more complex particularly for undertaking like fiscal instruments where single members of the Board are delegated particular duty for the undertaking with the job discussed on a regular basis with the relevant staff, assisting to construct the documents that come to the Board. The international fiscal coverage criterions formulated to day of the month by IASB are shown below:
The IFRS model describes the basic constructs that underlie the readying and presentation of fiscal statements for external users. This model serves as a usher to the board in developing future IFRSs and as usher to deciding accounting issues that are non addressed straight in an International Accounting Standard or International Financial Reporting Standards or Interpretation ( Deloitte, 2011 ) . Paul ( 2011 ) added that the conceptual model is needed to steer preparers of fiscal statements when they encounter spreads in the criterions that are inevitable.
Harmonizing to Alexander et Al ( 2009, p.138-139 ) argued that the model does non hold the position of an IAS, does non overide any specific IAS and, in instance of struggle between the Framework and an IAS, the latter prevails. They farther stated the undermentioned intents of the model:
To help the Board of IASB in the development of future IASs and in its reappraisal of exisiting IASs ;
To help the Board of IASB in advancing harmonization of ordinances, accounting criterions and processs associating to the presentation of fiscal statements ;
To help national standard-setting organic structures in developing national criterion ;
To help preparers of fiscal statements in using IASs and in covering with subjects that have yet to organize the topic of an IAS ;
To help hearers in organizing an sentiment as to whether fiscal statements conform with IASs
2.5 Early surveies of accounting pick until 1990s
Harmonizing to Jackson and Cook ( 1998 ) , the being of International accounting criterions can be traced back to the in-between ages ( 400-1400 AD ) , when international trade expanded significantly as a consequence of the campaigns which stimulated European demand for foreign goods. Toward the terminal of this period foreign trade had become rather prevailing and the constitution of foreign concern subdivisions was a natural consequence. They added that the Italian company of Francesco di Marco is an illustration of a company that operated through foreign subdivisions. This company had a subdivision in Barcelona that had a balance sheet in its Datini Archives, with besides an income statement covering the period from 11July 1397 to 31 January 1399. At this point in clip, the exchange net income or loss was calculated by taking the differences between the balances stated in the foreign currencies and the balances stated in the local currency.
Blake & A ; Lunt ( 2001, p.1 ) stated that anterior to the constitution of the accounting criterions programme, the ICAEW gave counsel to its members in a series of statements, ‘Recommendations on Accounting Principles ‘ . The issue of such recommendations started with the constitution of the Taxation and Financial Relations Committee ( Later renamed Taxation and Research Committee ) in 1942, and 29 recommendations had been issued by 1969. They added that ‘Recommendation on Accounting Principles ‘ by and large consisted of sum-ups of current pattern instead than giving a lead in new developments, and were seldom backed up by formal research. During the 1960s a figure of instances where bing accounting and scrutinizing pattern seemed to take to an unsatisfactory consequence led to considerable unfavorable judgment of the accounting profession.
Sullivan ( 2005 ) studies that consensus emerged that unequal transparence by international administrations, national authorities units, and private sector entities was a conducive force to the serious fiscal turbulencies that have plagued the planetary economic system. The decision was reached that market can non work expeditiously, and that they will go on to be extremely susceptible to instability, in the absence of adequate, dependable, and timely information from all quarters. Lack of accurate and timely information on economic and fiscal developments and policies, peculiarly in an environment of economic and fiscal failing, aggravates the failing and contributes to the outgrowth of crises state of affairss. In order to turn to these issues, the IFRS was introduced to supply an in agreement minimal conceptual model for coverage.
In a similar mode, Koen ( 2001, p.2 ) highlighted that fiscal and capital market liberalisation tendencies of the 1980s, which brought increasing capriciousness in fiscal markets, increased the demand for information as a agency to guarantee fiscal stableness. In the 1990s, as fiscal and capital market liberalization increased, there has been mounting force per unit area for the proviso of utile information in both the fiscal and private sectors ; minimal revelation demands now dictate the quality and the measure of information that must be provided to the market participants and to the general populace. The acceptance of the internationally recognized accounting criterions is a necessary step to ease transparence and proper reading of fiscal statements.
The research worker found out that the early research workers on IFRS focused more on how IFRS could help transparence and credibleness in fiscal coverage. However, the recent research workers now have extended their range beyond transparence of fiscal statements but have delved into IFRS relevancy to foreign investings, administration, equity, net incomes and fiscal instruments.
2.5.1Recent surveies of accounting pick utilizing IFRS
With turning prominence of IFRS, the relevancy of its construct has gone beyond transparence and credibleness of the fiscal statements. Several recent surveies have examined the effects of IFRS in the country foreign investings, corporate administration and derived functions which constitutes the construction and basic traffics of fiscal establishments.
Bartov et Al, ( 2005 ) stated that in recent old ages, most companies have reported amalgamate fiscal statements under UK GAAP, U.S GAAP, other local GAAPs and International Accounting Standards. Market perceivers, research workers, and regulators have argued that fiscal statements prepared under the stockholder theoretical account, such as UK GAAP or IAS, supply better information than fiscal statements prepared under the stakeholder theoretical account ( Nigerian GAAP ) . They argued that IASs supply better information on quality of net incomes in the instance of loss houses compared to local GAAP, with their focal point on German GAAP. Similarly, Vafaei et al. , ( 2011 ) assert that any betterment in the quality of net incomes and equity due to IFRS acceptance is likely to hold auxiliary clasp in the market if companies provide superior Intellectual Capital information. Such enhanced revelation would let investors to break take into history the extent of value-generating capablenesss non straight captured in the reported net incomes and equity Numberss. With the planetary prominence of IFRS, fiscal establishments like Bankss are expected to do equal revelations of derived functions due to the nature of their complexness. These revelations require extended qualitative and quantitative information explicating the importance of fiscal instruments to an entity ‘s fiscal statements, its exposure to hazard and how this exposure is managed. The fiscal crisis has had a important impact on the fiscal sector, and there is significant demand from fiscal statement users to better the quality of revelation, including account of important direction opinion and sensitiveness analysis ( KPMG International, 2011 ) . However, Jeanjean and Stolowy ( 2008 ) are of different sentiment that the debut of IFRS does non convey about diminution in the pervasiveness of net incomes direction but instead increased it. They farther stated that publishing Board should give their attempts to harmonize inducements and institutional factors instead than harmonizing accounting criterions.
Bolt-Lee and Smith ( 2009 ) wrote that anterior research reveals that investors perceive a higher hazard associated with foreign investings due to legion factors, including differences in fiscal accounting criterions, uncertainness about fiscal statements quality, and a deficiency of acquaintance with awaited hereafter hard currency flows. Home prejudice is the thought that stockholders favour domestic over foreign investings, preferring the certainty and acquaintance of fiscal information available from domestic houses. In add-on, investors feel they have a greater apprehension of domestic fiscal coverage, which enhances their determination devising. Marquez-Ramos ( 2008 ) added that tthe creative activity of international markets is related to four cardinal freedoms: 1 ) the free motion of goods, 2 ) the free motion of services and freedom of constitution, 3 ) the free motion of individuals and workers and 4 ) the free motion of capital. To accomplish all these, the substructure of national markets has to be harmonised. International accounting criterions is considered a portion of the construction.
It is argued by Farooque et al. , ( 2009 ) that the outgrowth of concerns associating to governance issues, acceptance of International fiscal coverage criterions ( IFRS ) , implementing regulation of jurisprudence and consciousness of commanding corruptness now warrant an increasing planetary importance, in peculiar developing states endeavoring for foreign direct investing. Akisik ( 2008 ) stated that without holding an effectual fiscal coverage system that provides investors with dependable and true information, emerging market states are improbable to pull foreign direct investing. As a consequence, a figure of developing states has late enhanced their attempts to better fiscal describing systems and corporate administration in order to increase their dickering power in pulling foreign direct investing.
2.6 Legal and Regulatory Framework of Accounting in Nigeria
The legal and regulative model of accounting in Nigeria is expressed via the Companies and Allied Matters Act ( CAMA ) , and the dictum of the accounting professional organic structure, the NASB.
2.6.1 The Company and Allied Matters Act ( CAMA )
The Company and Allied Matters Act 1990 stipulate some format and content of company fiscal statements, revelation demands and scrutinizing. It besides requires that fiscal statements comply with the statement of accounting criterions ( SAS ) issued from clip to clip by the Nigerian Accounting Standards Board ( NASB ) and that audit be carried out with by and large accepted auditing criterions ( Madawaki, 2012 ) .
2.6.2 Nigerian Accounting Standards Board
The Nigerian Accounting Standards Board ( NASB ) came into being on September 9, 1982. It is the merely recognized independent organic structure in Nigeria responsible for the development and issue of Statements of Accounting Standards for users and preparers of fiscal statements, investors, commercial endeavor and regulative bureaus of the authorities.
NASB foremost became a authorities parastatal in 1992 as constituent of the so Federal Ministry of Trade and Tourism. The NASB issued some criterions without being to the full established by Torahs of the Federal Republic of Nigeria. This nevertheless did non do accounting criterions issued by NASB less effectual or irrelevant but, was non whole-heartedly followed by all participants in the accounting industry ( Nigerians Financial Hub, 2011 ) .
2.6.3 Development of Nigerian Statements of Accounting Standards
The development of accounting criterions in Nigeria is similar to that of United Kingdom as stated in Financial Reporting Council of Nigeria ( 2010 ) study. Acccording to this study, the Nigerian SAS is developed as follows:
Statements of Accounting Standards in Nigeria are developed through a formal system of due procedure affecting wide national audience and a thorough audience and a thorough consideration of local Torahs, current patterns, and criterions of other states, most particularly, those of International Accounting Standard Boards.
Normally, the development and issue of a statement of accounting standard involves taking a subject for standardization in response to suggestion from the concern community, academe, member administrations or members of staff and Council of NASB. A maneuvering commission, dwelling of experts drawn from public, private and professional sectors of the economic system, is so set up. This commission, with the NASB secretariat, fix a preliminary exposure bill of exchange, which is presented to the Governing Council for consideration and blessing.
The Council, at a proficient session, finalises the papers and approves it for exposure to the public if two-thirds of Council members vote in favor of its exposure. Exposure period is normally three months, during which the populace is expected to notice. The exposure bill of exchange may be modified in visible radiation of the remarks received and thenceforth issued as a Statement of Accounting Standards.
2.7 IFRS Pathways towards Global criterion
Most people agree that there is a demand for one set of globalised accounting criterions. As communicating barriers continue to drop, companies and persons in different states and markets are going comfy purchasing and merchandising goods and services from one another. Most notably, investors no longer restrict themselves to the markets of their place state ( Weygandt et al. , 2009 ) . With this inducement to put in foreign markets, this necessitates the demand to harmonize the fiscal coverage model globally for effectual flow of resources.
2.7.1 Entry Pathways 1912 vs. 2012
A century ago or more Nigerian economic system was greatly influenced by its British Empire, being one of its settlements in the West African part. Up boulder clay day of the month, Britain is still a dominant entity in a trade friendly international political economic system and the major beginning of Nigerian trade and Institutional model ( Evans and Poullaos, 2012, p.16-17 ) . These tracts tend to indicate out how the British accounting system is imbibed into Nigerian accounting system. The roadmap to acceptance of IFRS in Nigeria is based on the tracts below:
Table: Cardinal contrasts in entry tracts -1912 vs. 2012
British Empire -Circa 1912
Globalisation- Circa 2012
British theoretical accounts of accounting adapted to Nigerian conditions
Nigerian theoretical accounts now being adapted to suit the planetary accounting sphere
Specifying and commanding state/national sod
Traveling beyond the national
Closing as a scheme
Openness as a scheme
Competition between professional organic structures
Competition between professional organic structures
Accounting work – non tightly defined but contracting
Accounting work – non tightly defined but broadening
Very small authorities ( or university ) engagement in entry tracts
Significant authorities and university engagement in entry tracts
Adapted from: The Institute of Chartered Accountants in Australia
2.7.2 Development of Nigerian Accounting System
Accounting is, above all, a human pattern, and like all human patterns it is based on human interaction. Such Interaction is established in what went before-both persons and administrations may be regarded as scholars, whose current ideas and actions are to a big extent the consequence of their ain yesteryear and the yesteryear of the societies and puting in which they live and interact. The inherent aptitudes that shape the determinations of preparers, users and hearers, and the fiscal and direction information that they use, are the merchandises of experience ( Carnegie and Napier, 2012 ) .
Harmonizing to Ekoja ( 2004 ) , the history of Nigeria accounting can be traced back to the period of colonial disposal. During this period, Nigeria was runing two types of cash-based accounting systems. These were the cash-based and the modified cash-based systems. The former is the 1 adopted in Nigeria ‘s public sector accounting procedures and it records alterations in the hard currency flow while the latter includes some elements from the accrual-based accounting such as stock list or belongings capitalization. Saudagaran ( 2009, p.7 ) pointed out that most states that were colonized for an drawn-out period of clip typically found themselves utilizing the accounting system of the colonial power. This was the instance of Nigeria. Accounting system is seen as a phenomenon that can assist battle poverty-which is a major quandary in the development states, through sound economic policies and the impulse for answerability in apportioning land, labor and capital. Allocating such resources is, in most portion, an organizational pattern that is usually enhanced through the proviso of accurate information. Accurate information is the footing for accounting, as the comptroller is the processor and keeper of information in administration. Nigeria, with its peculiar variables, actuating parametric quantities, accounting constructs, and calling picks, is the state of focal point ( Udemezue,2008, p.1 ) .
Chapter THREE: RESEARCH METHODOLOGY
This chapter will supply inside informations of the research methodological analysis adopted to turn to the research objectives stated in chapter one above, together with the agencies of roll uping informations for analysis. The following subdivision 3.2 focal points on the research method. Chiefly two research methods are adopted for informations aggregation. The first is the usage of questionnaire and telephone interview and the 2nd is through secondary beginnings like diary, books, web sites and relevant articles. Section 3.3 high spots the research scheme which is a instance survey of fiscal establishments in Nigeria. The last subdivision of this chapter is on the research attack adopted in transporting out this research.
3.2 The Choice of Nigeria Financial Institutions
The desire to increase the fiscal coverage in the state and to add to the literature on emerging economic systems influences the determinations of the research worker to take Nigeria ‘s fiscal establishments as the instance survey. The acceptance of IFRS in Nigeria offers the research worker the chance to measure the chances and challenges faced by fiscal establishments, which is a cardinal sector in the economic system. It is besides of import to province here that this country had non been looked into by anterior research.
3.3 Research Methods
Every research undertaken has its intent and assorted methods must be devised in order to carry through this intent. Biggam ( 2008, p.80 ) mentioned that research surveies that lack cardinal information on the research methods used, and why the research was implemented, are worse than useless and can non be trusted. There are different definitions given by different writers on what research methodological analysis entails but all Centres on the same significance. Singh and Bajpai ( 2008, p.163 ) defined research method as “ a manner of carry oning a research work which is determined by the nature of the job. ” Kumar ( 2008, p.4 ) stated that research methods include method for informations aggregation, techniques which are used for set uping relationships between the informations and the terra incognitas and method for measuring the truth of the consequences obtained.
3.4 Research Strategy
The scheme to be adopted in this research is a instance survey. Gillham ( 2000 ) defined a instance survey as “ one which investigates a phenomenon to reply specific research inquiries ( that may be reasonably loose to get down with ) and which seeks a scope of different sorts of grounds, grounds which is at that place in the instance scene, and which has to be abstracted and collated to acquire the best possible replies to the research inquiries. ”
The research worker has chosen to follow a instance survey scheme to enable him concentrate the research on a peculiar sector of the economic system instead than the whole economic system. It will besides let the research worker to streamline his apprehension on the kineticss present within individual scenes. In add-on, the usage of instance survey takes the advantage of the rich context for empirical observation provided by instance scenes to analyze a selected phenomenon utilizing qualitative or quantitative methods without offering formal theoretical readings of the survey ( Swanson and Holton, 2005, p.359 ) .
Qualitative methods are described by Gillham ( 2000, p.10 ) as basically descriptive and illative in character and, for this ground, are frequently seen as soft. He added that they focus chiefly on the sort of grounds that will enable the research worker to understand the significance of what is traveling on ; this means that their great strength is that they can clear up issues and turn up possible accounts. Pellissier ( 2007 ) mentioned that this method enables a research worker to understand in greater inside informations through probing and apprehension of respondents ‘ attitudes, motives and behaviors. He added that qualitative method tends to travel deeper beyond historical facts and surface remarks in the snapshot attack, in order to acquire to the existent implicit in causes of behavior.
While quantitative method is the research that is concerned with measures and measurings, such as numerical figures or rate of an identified population ( Biggam, 2008 ) . This method can be used to detect the relationships, readings, and features of topics that suggest new theory and specify new jobs ( Swanson and Holton, 2005, p.33 ) . Quantitative research is an first-class manner of finalizing consequences and turn outing or confuting a hypothesis. He stated further that it utile for proving the consequences gained by a series of qualitative experiments, taking to a concluding reply and a contracting down of possible waies for follow up research to take ( Shuttleworth, 2008 ) .
The research worker will be utilizing more of the qualitative method with a spot of quantitative method. The chosen method is greatly influenced by the research subject and the research objectives. The research subject is to research chances and challenges of IFRS acceptance by fiscal establishments in Nigeria, which is a contemplation of ‘why ‘ and non ‘how ‘ . This denotes that qualitative method will be the most suited research method as it links with in-depth exploratory surveies and besides reply the inquiry ‘why ‘ as explained by Biggam ( 2008 ) . However, the ground for the usage of both is that the qualitative appraisals will enable the alteration of the information analysis model, while the quantitative analysis is to supply a logical account of the fiscal information ( Bamberger, 2000, p.112 ) .
3.5 Research Approach
Due to the qualitative nature of this research work, the research attack to be adopted is inductive in order to develop an apprehension of the context of IFRS acceptance in the underdeveloped economic systems like Nigeria. Research utilizing an inductive attack comprises chiefly qualitative informations aggregation and rating from which a hypothesis can be derived. This attack besides considers the engagement of the research worker in footings of direct engagement in collating informations. In add-on, this inductive attack will enable the research worker to do more informed determinations about the research design based on the grounds gathered from the usage of his agencies of informations aggregation ( Saunders et al. , 2009, p.126 ) . The information aggregation is both primary and secondary informations. The usage of questionnaires and interviews is utilized as a primary beginning of informations aggregation. Questionnaire is used because it consists of both closed and unfastened ended inquiries, therefore giving both quantitative and qualitative informations. It besides saves cost, clip and removes geographical and temporal boundaries that could hold served as an obstruction to the research worker ( Katsirikou and Skiadas, 2010, p.293 ) . The inquiries were all set in simple linguistic communication for lucidity and easiness of understanding. The kernel of the interview is to acquire undiluted and accurate information from the respondent. The response rate is good and informations will be complete and immediate- there is besides an chance for the respondent to travel into more item. This method besides allows the research worker to be in control throughout the interview and to besides offer aid where the respondent seems confused or non clear ( Colins, 2010, p.124 ) . In add-on to the phone interview, some selected persons were interviewed via face-book and blackberry courier. This medium was chosen in order to accomplish the awaited consequence from some selected persons who preferred to associate with the research worker via societal webs. This was made possible due to the promotion in information engineering. However, due to the failings associated with this method of informations aggregation as explained by Ghauri and Gronhaug ( 2005 ) like less grade of control on informations aggregation, hard entree to aim group that are willing and ready to reply the inquiries and besides the dependance on the willingness and ability of respondents will take to the research worker utilizing secondary informations every bit good.
The critical inquiry which is ‘what are the impulsive factors and likely restraints the acceptance of IFRS will enforce on the fiscal Institutions in Nigeria? ‘ is largely explored utilizing secondary beginnings like diaries, imperativeness releases, other documental beginnings and some responses from the interviewee. In add-on, the one-year studies of relevant Bankss and accounting and auditing houses are besides punctually consulted. A big figure of publications and beginnings have been used to give a broader and clearer image. The secondary beginnings challenge the sentiments of the different schools of idea. The beginning is besides economical because the cost of roll uping original informations is saved. Vartanian ( 2011, p.14 ) mentioned that secondary informations screen wide scope of subjects, and the quality of these informations sets, from reputable administrations, is frequently high. He added that utilizing bing informations may let for the timely appraisal of current policy issues ; because many bing informations sets have been designed to restrict policy relevant results, they have the possible to get down capturing policy effects every bit shortly as policy displacements. Prescott ( 2008 ) stated that regardless of the virtues of secondary research mentioned above, the research worker needs to take sufficient stairss to critically measure the cogency and dependability of the information provided. In add-on, another demerit for utilizing the secondary information is that the research worker needs to trust on informations that is presented and classified in a manner that is similar to his demands. He farther stated that in most instances, research workers find information that is valuable and promising but may non acquire the full version of the research to derive the full value of the survey.
The research methodological analysis requires garnering relevant informations from a mark section of the Nigerian economic system, which is the fiscal sector. Choosing this sector will enable the research worker to avoid ambiguity and besides to guarantee focal point instead than undue attending on the whole economic system. Due to the chosen subject and instance survey, interviewees were selected from the following groups: Bankss ‘ staff, members of Institute of Chartered Accountants of Nigeria, agents from Nigerian Stock Exchange, senior hearers from reputable scrutinizing houses in Nigeria and top officers in consultancy houses. The choice standard for the interviewees was based on the degree of understanding and experience of each selected individual in the country of Nigerian accounting system.
Due to the work and clip restraints of the chosen professionals and the research worker ‘s inability to run into them in individuals owing to the location in which the research is undertaken, structured questionnaires were sent in front of clip through electronic mails, in order to acquire the interviewees acquainted with the subject country before the proper interview. These inquiries contain certain multiple picks that were drawn from literature reappraisal and clearly set out to turn to the research aims.
In order to obtain extra grounds and besides to confirm the replies provided by the questionnaire respondents, phone and face-book interviews were conducted. Most of the randomly chosen participants for the interview preferred the interview via face-book because it is more economical and could easy be reviewed by the research worker. The phone interviews were non recorded due to refusal of participants and confidentiality purpose. This is one of the major restrictions of the survey in add-on to distance barrier stated above. The response rate for the questionnaire can be summarised as follows:
Table: Analysis of on-line study responses
Target for questionnaire
Accountant and Hearers
3.5.2 Data Analysis
All informations gathered through interview and paperss will be analysed qualitatively, while those from questionnaire will be analysed utilizing quantitative methods. Data analysis gives converting grounds to cut down bias and to help the survey to do just analytical decisions that rule out misunderstandings. This analysis helps the research worker to orchestrate the informations collected against the significance or deduction of the survey being conducted. In add-on, informations analysis creates the ability to get important informations needed to do quality determinations based upon existent concern tendencies and determinations ( Melbourne, 2008 ) . Furthermore, informations analysis enables the research worker to filtrate unwanted information from the relevant information. It involves size uping informations, presentation of informations and pulling decision.