The Significance of International Financial Reporting Standards to Emerging Economy of Nigeria

Abstract

This paper explores the relevance of International Financial Reporting Standards (IFRS) to emerging economies in general and Nigeria in particular. The research uses evidence from interviews conducted with senior officers from two Big Four accountancy firms in Nigeria and prior studies exploring IFRS implementation of IFRS in emerging economies to shed light on the influence of complex economic, institutional, cultural and social factors influencing accounting. The findings suggest that accounting practices in Nigeria are dominated by the historically inherited institutionalized accounting system of the old Nigerian era, when accounting information was primarily geared towards meeting the needs of government agencies such as Statistics Committee and tax authorities. The main problems of implementing IFRS in Nigeria were pressures to comply with tax codes, too much power vested in government organizations as opposed to accounting profession, lack of IFRS expertise, deficient enforcement mechanisms and expectation of tax authorities that accounting standards should mimic tax codes. The findings are limited to questioning the relevance of IFRS to emerging economies and have implications for policy makers contemplating to adopt IFRS in those countries. This paper provides some insights into the benefits and drawbacks of IFRS adoption and would be of interest to those in the field.