Project Topic:

THE IMPACT OF INTERNATIONAL FINANCIAL STANDARDS (IFRS) ON THE QUALITY OF FINANCIAL STATEMENTS.

Project Information:

 Format: MS-WORD ::   Chapters: 1 - 5 ::   Pages: 65 ::   Attributes: Questionnaire, Data Analysis, Abstract  ::   715 people found this useful

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ACCOUNTING UNDERGRADUATE PROJECT TOPICS, RESEARCH WORKS AND MATERIALS

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CHAPTER ONE

 

BACKGROUND OF THE STUDY

 

This study sets out to examine whether the impact of International Financial Reporting Standards (IFRS) in Nigeria has improved the quality of financial reporting in First Bank of Nigeria Plc. Nigeria adopted IFRS, and then referred to as International Accounting Standards (IAS), in 1999 through a resolution by the Council of the Institute of Certified Public Accountants of Nigeria (ICPAN), the legally mandated accounting institute in Nigeria. The study compares changes in the quality of accounting between the pre-adoption period from 1995 to 1999 and the post adoption period from 2000 to 2004. The study specifically tests whether there is less earnings management, more timely loss recognition and higher value relevance in the adoption period as opposed to the pre adoption period. It also takes a global perspective to the IFRS question in relation to quality. The outcomes of the study show mixed results with some of the metrics indicating a marginal increase in accounting quality and others showing a decrease in the quality of accounting.Since their inception, International Accounting Standards have been produced by two bodies. The first, the International Accounting Standards Committee (IASC) came up with 41 accounting standards between 1973 and 2000. The IASC was replaced by the International Accounting Standards Board (IASB) in the year 2000. The new Board embarked on a review processes aimed at refining the standards. The result was a reduction in the number of standards from 41 in the year 2000 to 28 by the year 2008. By 2011, 13 standards had been issued by the board as International Financial Reporting standards (IFRS). According to IAS Plus (2010), IFRS refers to the entire body of IASB pronouncements including standards and interpretations approved by IASB, IASC and their interpretations produced by the Accounting Standards Interpretations Committee (IASIC). IFRS orIAS have also been described as a set of standards stating how particular types of transactions and other events should be reflected in financial statements, issued by IASC and IASB (ACCA 2008:41). The primary objective of the accounting standards is to enable corporations to provide investors and creditors with relevant, reliable and timely information which is in line with the IASB’s accounting framework for the preparation and presentation of Financial Statements. Such information, it is argued, contributes towards the achievement of orderly capital markets around the world Imhoff (2003:117). The concept of accounting quality is based on the IASB framework where relevance, reliability, understandability and comparability (IFRS 2006:38) are key components and therefore, assumed that financial statement with the four qualitative characteristics have better quality. Chen et al. (2010:222) has simply described accounting quality as the extent to which the financial statement information reflects the underlying economic situation. In simple terms, this study seeks to establish if the adoption of IFRS has improved qualitative characteristics of the financial reporting in Nigeria, where such improvement would be regarded as improvement in quality.In spite of the arguments, many countries and companies have adopted IFRS and the need to evaluate their impact has been overwhelming. Barth et al. (2007:2) indicate that accounting amounts results from interaction of features of the financial reporting system which include accounting standards, their interpretations, enforcement, and litigation and this obviously leads to obtaining different results from application of the same standards. Ball et al. (2003) by extension argue that high quality standards like IFRS may also lead to low quality accounting information depending on the incentives of the preparers. It is these contradictions that led Ball et al. (2003) and others to conclude that poor preparer incentives, underlying economic and political factors influence manager and auditors incentives as opposed to accounting standards. Many factors have also been cited as impacting financial reporting practices such as effective enforcement of standards and strong corporate governance.

 

STATEMENT OF THE PROBLEM

 

Although many countries have faced challenges in their decisions to adopt IFRS, its wide spread adoption has been promoted by the argument that the benefits outweigh the costs. Recently there has been a push towards the adoption of IFRS developed and issued by the International Accounting Standards Board (IASB). The organizations should enable regulators and other key player to gauge the effectiveness of the financial reporting system in place such as training and development for practitioners and new members, due diligence for Accounting standards and the overall institutional and professional organization conducive for effective standards application. Therefore, implementation of IFRS would reduce information irregularity and strengthens the communication like between all shareholders and also reduces the cost of preparing different version of financial statements where an organization is a multi-national.

 

OBJECTIVES OF THE STUDY

 

The objective of the study is to find out the following:

To examine the impact of IFRS on quality of financial statement in First Bank of Nigeria Plc. To examine whether the International Financial Reporting Standards (IFRS) in Nigeria has improved the quality of financial reporting in First Bank of Nigeria Plc. To find out role the of IFRS play in banking institutions in Nigeria. To determine whether IFRS adoption and implementation has been made positive impact in Nigeria. To find out the problems confronting the staff of First Bank of Nigeria Plc in adopting IFRS into system. To make useful recommendations based on the findings of the study. 

RESEARCH QUESTIONS

   Does IFRS aid quality of financial statement in First Bank of Nigeria Plc? Does International Financial Reporting Standards (IFRS) in Nigeria improved the quality of financial reporting in First Bank of Nigeria Plc Does IFRS play any significant role in banking institutions in Nigeria? Has there been effective implementation and adoption of IFRS in First Bank of Nigeria Plc? Is there any problem confronting the staff of First Bank of Nigeria Plc, Uyo in enhancing quality financial statement?

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