1.1 Background to the Study
Accounting is defined as the language of business. Accounting is a mean by which business financial information is communicated to its stakeholders (Longe, 2002). Financial statements apart from stating the financial position of an organization, provides other information such as the value added, changes in equity if any and cash flows of the enterprise within a defined period time to which it relates (Iyoha and Faboyede, 2011). This information is useful to a wide range of users making informed economic decisions. The quality of financial reporting is indispensable to the need of users who requires them for investment and other decision making purposes. Financial reports can only be regarded as useful if it represents the “economic substance” of an organization in terms of relevance, reliability, comparability and aids interpretation simplicity (Penman, 1984).
Ahmed (2003), stated that useful accounting information derived from qualitative financial reports help in efficient allocation of resources by reducing dissemination of information asymmetry and improving pricing of securities, (Spiceland, 2001). To prepare and audit financial statements, some accounting convention and principles known as standards have been put in place by appropriate bodies set up for the purpose to encourage uniformity and reliability, (Stainbank & Peeles, 2006).
Recently there has been a push towards the adoption of IFRS developed and issued by the International Accounting Standards Board (IASB). The increasing growth in international trade, cross border financial transactions and investments which unavoidably involves the preparation and presentation of accounting reports that is useful across various national borders, has brought about the adoption of IFRS by both the developed and developing countries, (Armstrong, 2007).
The process of adoption received a significant boost in 2002 when the European Union adopted a regulation 1606/2002 requiring all public companies in the territory to convert to IFRSs beginning in 2005, (Iyoha & Faboyede, 2011). A number of African countries including Nigeria, Ghana, Sierra Leone, South Africa, Kenya, Zimbabwe and Tunisia among others have adopted or declared intentions to adopt the standards. In particular, Nigeria adoption of IFRS was launched in September, 2010 by the Honourable Minister, Federal Ministry of Commerce and Industry – Senator Jubriel Martins-Kuye (OFR) (Madawaki, 2012). The adoption was planned to commence with Public Listed Companies in 2012 and by end 2014 all stakeholders would have complied. As at today, banking sector has fully implemented. This is considered a welcome progress for developing countries especially some of those that had no resources to establish own standards.
There are proponents as well as opponents who have arguments for and against the global adoption of IFRS. According to Barth (2007), the adoption of a common body of international standards is expected to have the following benefits: lower the cost of financial information processing and auditing to capital market participants as users, familiarity with one common set of international accounting standards instead of various local accounting standards by Accountants and Auditors of financial reports, comparability and uniformity of financial statements among companies and countries making the work of investment analysts easy, attraction of foreign investors in addition to general capital market liberalization.
Ball (2006) stated that many developing countries where the quality of local governance institutions is low, the decision to adopt IFRS will be beneficial. GAB (2012) stated that one of the demerits that will be experienced by countries adopting of IFRS include: forgoing the benefits of any past and potential future innovations in local reporting standards specific to their economies. Single set of accounting standards cannot reflect the differences in national business practices arising from differences in institutions and cultures (Armstrong et al., 2007).
All these are proves that adoption of IFRS effect can be likened to a coin with two sides which individual based their judgment from the side facing them. This is what many accounting information stakeholders are now facing on the effect of IFRS adoption which this research project is set to balance through the view of these stakeholders.
1.2 Statement of the Problem
Generally new things when it's first introduce usually generate argument in the society among the users of the former, These tend to be normal as not all people will reason the same way and what may be of advantage to a set of people may prove to be a disadvantage to others.
No doubt the introduction and adoption of IFRS as established such argument among the financial information stakeholders on the effect of IFRS. Moreover, has some of the accounting information users count it as a good development after considering the advantage of the adoption, others perceive such as disadvantage.
In other to fill this gap this research is geared toward gathering the perception of this stakeholders on the effect of IFRS and prefer the possible enlightenment for a general proper view on the potential effect of these newly adopted reporting standard.
1.3 Research Questions
1) Does IFRS adoption cause changes in business performance management?
2) Does IFRS adoption improve the level of compliance with accounting standards?
3) Is there any relationship between IFRS and accounting complexities?
1.4 Research Hypotheses
H1: There is no significant relationship between IFRS implementation and improvement in business performance management (BPM).
H2: There is no significant relationship between IFRS adoption and level of compliance with accounting standards.
H3: There is no significant relationship between IFRS and accounting complexities.
1.5 Significance of the Study
Since IFRS adoption as taken effect in Nigeria, it is now crystal clear that it is not an option anymore but a must for all financial information providers to follow it in their reporting standard.
This study is thus channeled toward acquiring the perceptions of the stakeholders who are interested in this accounting information as a source of data collection to provide the necessary information needed by the users.
This research work will however help all stakeholders of accounting information to develop the right view of the IFRS adoption. Moreover, it will also provide the needed information on the reasons why the adoption may have been right or wrong.
1.6 Scope of the Study
The scope of these study will be restricted to all the financial information stakeholders and financial statement reporters in Nigeria, either been an internal users or external users or reporters in Nigeria.
1.7 Operational Definition of Terms
Perception: This refer to the view of stakeholders on IFRS
Stakeholders: This refers to persons or organizations with legitimate interest in financial information
Financial Information: A statement of money recorded, processed and interpreted to users.
Effective: Having the potential to produce effect or decide an action
Accounting: The development and use of a system for recording and analyzing the financial transaction and status of a business.
IFRS: These are set of accounting standards developed by the international accounting standard board (IASB) that is becoming the global standard for the preparation of the public companies financial statements.
OTHER SIMILAR ACCOUNTING PROJECTS AND MATERIALS