An Assessement of Compliance with IFRS Framework at First-Time Adoption by the Quoted Banks in Nigeria

Sani Saidu^1, and Umar Dauda²

¹Aberdeen Business School, Robert Gordon University, United Kingdom

²Debt Management Agency, Bauchi State, Nigeira

Cite this paper:
Sani Saidu and Umar Dauda. An Assessement of Compliance with IFRS Framework at First-Time Adoption by the Quoted Banks in Nigeria. Journal of Finance and Accounting. 2014; 2(3):64-73. doi: 10.12691/jfa-2-3-3

Abstract

The move towards adopting unified and higher quality accounting standards across the globe started fully in 80s and was catalyzed by stakeholders in advanced economies, in the year 2001 with the establishment of the International Accounting Standards Board (IASB). In its first sitting, the new board unanimously agreed to consolidate all the Standards issued under IASC (IASs) with the ones issued under the new board (IFRSs) as IFRS-framework. The board also stipulated clear procedures to be followed by every entity adopting the consolidated framework. Thus, this study assessed the extent to which the Nigerian Banking Industry complied with these requirements as captured in IFRS 1: First Time Adoption of IFRS. Using ex-post facto and survey research designs, the study sourced data from structured questionnaire and recent audited financial reports of the sampled banks. Qualitative Grading System (QGS) was employed in determining the degree of compliance of the banks while Multivariate regression and Chi-squire test were used in measuring the effect of the factors responsible of such compliance and identified probable difficulties in the process respectively. The study concludes that, Nigerian banking industry complied (semi-strongly) with the requirements of IFRS-framework but, the exercise is still faced with some challenges which include: lack of indepth IFRS knowledge from the preparers of the financial reports. The study also found amenability, globalization and response to users’ needs as factors significantly influencing the compliance level of Nigerian banks with IFRS-framework.

Keywords:
compliance first-time adoption IFRS nigerian banks

This work is licensed under a Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/

References:

[1]	Al-Shammari, B. A. (2005). Compliance with International Accounting Standards by Listed Companies in the Gulf Co-Operation Council Member States: An Empirical Study. PhD Thesis, University of Western Australia.
[2]	Asika, N. (2005). “Research Methodology in Behavioral Sciences: Lagos” Longman Publishing Limited Banks and Other Financial Institutions Act 1991.
[3]	Botosan, C. and Plumlee, M. (2002). “A Re-examination of Disclosure Level and the Expected Cost of Equity Capital”, Journal of Accounting Research, 40, pp. 21-40.
[4]	Bushman, R. and Smith, A. (2001). “Financial Accounting Information and Corporate Governance”: Journal of Accounting and Economics, 32, pp. 237-334.
[5]	Briston, R. J. (1990). Accounting in Developing Countries: Indonesia and the Solomon Islands as Case Studies for Regional Cooperation” Research in Third World Accounting, Vol. 1, pp. 195-216.
[6]	Companies and Allied Matters Act (1999): Available at www.Nigeria-law.org (Retrieved on 03/12/2011).
[7]	Central Bank of Nigeria (2004). Financial Markets in Nigeria (Abuja): A CBN publication.
[8]	Chung, R., Firth, M. and Kim, J. (2002). “Institutional Monitoring and Opportunistic Earnings Management”, Journal of Corporate Finance, 8 (1), pp. 29-4.
[9]	Cowry Asset Management Limited (2009) “Nigerian Banking Report” following the progress in Nigerian banks in the last ten years. Cowry research desk.
[10]	Dahawy, K., Merino, B. D. and Conover T. L. (2002). The conflict Between lAS Disclosure Requirements and the Secretive Culture in Egypt Advances in International Accounting, Vol. 15, pp. 203-228.
[11]	DiMaggio, P.J and Powell, W. (1983). Colonialism and Accounting Education in Developing Countries: The Experiences of Singapore and Sri Lanka. University of Illinois: the Iron Cage Revisited 1998.
[12]	Donaldson, L. and Davis, J. (1991). Stewardship Theory or Agency Theory: CEO Governance and Shareholder Returns: Australian journal of Management, pp 49-65 (June 1991).
[13]	El-Gazzar, S. M., Finn P. M. and Jacob R. (1999.) An empirical investigation of multinational firms’ compliance with International Accounting Standards; International Journal of Accounting, Vol. 34, No. 2, pp. 239-248.
[14]	FSDH Research (2011) the Nigerian banking industry review and outlook: first security discount house publication
[15]	Guidry, F., Leone, A.J. and Rock, S. (1999). “Earnings-based Bonus Plans and Larnings Management by Business-unit Managers”, Journal of Accounting and Economics, 26, Pp. 113-142.
[16]	Healy, P. and Palepu, K. (2001). “Information Asymmetry, Corporate Disclosure, and the Capital Markets: A Review of the Empirical Disclosure Literature”, Journal of Accounting and Economics, 31, pp. 404-440.
[17]	Kantudu, A. 5. (2008). International Harmonization of Accounting Standards; Advanced Accounting Theory and Practiced; Dandago, K. I. (eds) Adonis & Abbey Publishers Ltd.
[18]	Kantudu, A. S. (2005). Who beers the Consequences of Frauds in Nigerian banks: Dandago K. I. and Hamid K. T. (eds.) Gidan Dabino Publishers.
[19]	Kantudu, A. S. and Isa, M. A. (2005) Effect of Dividend decision on the Value of Commercial Banks in Nigeria: BIJAR, Vol. 2 Number 1 pp 1.
[20]	Kantudu, A. S. (2005). “The Degree of Compliance with the Requirements of Information to be Disclosed in Financial Statements by listed firms in Nigeria” Abuja Management Review Volume 3 (1).
[21]	Kasznik, R. (1999). “On the Association between Voluntary Disclosure and Earnings Management”, Journal of Accounting Research, 37, Pp. 57-81.
[22]	Kenneth, E. (2012). Adoption of IFRS and Financial Statements Effects: The Perceived Implications on FDI and Nigeria Economy (Australian Journal of Business and Management Research Vol. 2 No. 05 [76-83] I August-20 12).
[23]	KPMG (2010) Impact of IFRS on the Financial Services Industry: Available atwww.ng.kpmg.comAccessed on 02/02/2012.
[24]	Kurawa, J. M. (2009). Empirical Examination of Quality Financial Reporting Practice by Nigerian Money Deposit Banks: Dandago, K. I. (eds.) Triumph publishing company Ltd Kano
[25]	Larson, R. K. (1993). International Accounting standards and Economic growth: an empirical Investigation of their Relationship in Africa. Research in Third World Accounting, Vol. 2, pp. 27-43.
[26]	Leuz, C. (2003). “lAS Versus U.S. GAAP: Information Asymmetry-based Evidence from Germany’s New Market”, Journal of Accounting Research, 41 (3), pp. 445-472.
[27]	Madawaki, A. (2012). Adopting International Financial Reporting Standards in Developing Countries: The Case of Nigeria: International Journal of Business and Management. 7 (3).
[28]	Mainoma, M. A. (2005) Integrity of Financial Reporting and Accounting Development: An investigation Dandago K. I and Hamid K. T. (eds.) Gidan Dabino Publishers.
[29]	Mayer, S. E. (1990). “Capital Adequacy Ratio Regulations and Accounting Choices in Commercial Banks” Journal of accounting and economics. Pp. 123-154.
[30]	Obazee, J. (2012). “Nigeria’s Approach to IFRS adoption” Being a Termed Presented at the Induction of Institute of Chartered Accountants of Nigeria (ICAN): Lagos, Nigeria.
[31]	Oduware, U. (2012). “IFRS adoption in Nigeria &Optimizing the Gains of Global Investment climate”: Akintola Williams Deloitte (December 2012).
[32]	Schipper, K. (2007). Required Disclosures in Financial Reports The Accounting Review, 82 (2) 301-326.
[33]	Street, D. L. and Gray S. J. (2002). Factors Influencing the Extent of Corporate compliance with International Accounting Standards: Summary of a Research Monograph. Journal of International Accounting, Auditing and Taxation Vol. 11, No. 1, pp. 51-76.
[34]	Szilveszter, F. Dumitru, M. and János, L. (2010). Factors Influencing the Extent of Corporate compliance with IFRS: the Case of Hungarian listed companies (JEL Codes: M40, M41).
[35]	Tarca, A. (2004). “International Convergence of Accounting Practices: Choosing Between lAS and U.S. GAAP”, Journal of International Financial Management and Accounting, 15, p. 60-91
[36]	Tendeloo, B. and Vanstraelen, A. (2005). “Earnings Management under German GAAP Versus IFRS”, European Accounting Review, 14 (1), pp. 155-180.
[37]	Tyrrall, D, Woodward D. and Rakhimbekova, A. (2007). The Relevance of International Financial Reporting Standards to a Developing Country: Evidence from Kazakhstan. The International Journal of Accounting, Vol. 42, No. 1, pp. 82-110.
[38]	Wahien, J. M. (1995). “The nature of Information in Commercial Banks loan loss Disclosure”: The Accounting review, July, pp. 455-478.
[39]	Wood, F. and Sangster, A. (2002). Business Accounting: Ninth Edition, Pearson Education London (UK).