ABSTRACT
This research project investigated the effect of accounting standards on the quality of financial statements by commercial banks in Nigeria. In order to achieve the objectives of the study, two hypotheses were proposed and data collected through the issue of structured questionnaires to 60 staff of 6 commercial banks. the data which was analyzed using simple regression analyses showed that: There is a positive and significant relationship between accounting standards and the disclosure requirements of financial reports of commercial banks in Nigeria. The findings also show that there is positive and significant relationship between value relevance of financial statements and accounting standards in commercial banks in Nigeria. Given the findings, we make the following conclusions: The disclosure requirements in accounting standards are an important determinant of the quality of financial statements. The value relevance of financial statements also determines the quality of financial statements made public by commercial banks in Nigeria. More stringent measures be put in place to ensure that commercial banks in Nigeria follow laid down rules and regulations in disclosing items that will be adjudged to of high quality in order to aid investors and other stakeholders make informed decisions based on the financial statements. Uniform standards should be established across banks to ensure that the contents of financial statements different banks can easily be objectively compared in order to measure the performance of banks across board.
In view of the private sector, the Generally Accepted Accounting Principles(GAAP) was imposed on companies so that investors would have a minimum level of consistency in the financial statements they use when analyzing companies for investment purposes but the resultant discrepancies that existed in the financial reports of several nations (since each country is mandated to report its accounts in accordance with the stipulated accounting standards peculiar to it) led to the globalization of accounting standards.
Nicholas Pologeorgis 2012 examined the outcome of this discrepancies thus, “the different accounting standards of different countries brought about a lot of problems for investors trying to identify accounting reporting differences when they are considering providing funding to capital- seeking companies that follow the accounting and financial reporting in the country in which they are doing business. Robert Casey also identified international companies desire to use one set of reporting standards throughout the world, growth in capital markets (since International Financial Reporting Standards (IFRS) enhances the ability of firms to raise capital outside their borders), reduction in cost of capital and reporting cost as some of the reasons for global harmonization and convergence of accounting standards by the introduction of IFRS on the 1st of April 2001.
On July 2010,the Nigerian Federal Executive Council approved 1st January 2012 as the effective date for convergence of accounting standards in Nigeria with IFRS. Consequently, in June 2011, legislative changes were enacted under which the FRCN replaced the Nigerian Accounting Standards Board as the entity responsible for setting financial reporting standards in Nigeria (www.iasplus.com/en/jurisdictions/Africa/Nigeria). Nicholas Pologeorgis : 2012 compared GAAP to IFRS and posited that the main difference between them is the approach each takes to the standards; the GAAP is rule-based while the IFRS is a principle-based methodology.
The GAAP comprises of a complex set of guidelines attempting to establish rules and criteria for any contingency while the IFRS begins with the objectives of good reporting and then provides guidance on how the specific objectives relates to a given situation. However, it is imperative to probe the effect of this transition on the quality of financial reporting since financial statements are relied upon by corporate management, investors, stock markets, accounting professionals, accounting regulators, creditors etcetera for the purposes of investment decisions and corporate planning.
With the mandate of effecting IFRS for the private sector on the 1st of January 2012 in Nigeria, it is important to note how the transition from NGAAP to IFRS will affect the quality of financial reporting in terms its disclosure requirements and value relevance. Will these new and promising accounting standards be able to serve accounting and non-accounting users better than the NGAAP in terms of providing a higher quality of financial reports for their consumption?
Bearing in mind that the IFRS is a more summarized version of accounting standards compared to the voluminous nature of GAAP guidelines. Will IFRS for the private sector and IPSAS for the public sector aid the preparation and presentation of accounting reports in a manner that will be more relevant to accounting users on a global scale? Has the transition improved the quality of financial reports in terms of disclosure requirements, value relevance, what are some of the challenges that firms face in implementing new accounting standards? What is the effect of accounting standards on the quality of financial reporting? the provision of answers to these questions would reinforce the confidence of the users of the accounting information in the financial reports on which their decisions are based and it would curb their skepticism towards the transition from GAAP to IFRS. ........... FOR ACCESS TO THE FULL PROJECT WORK, USE THE ORDER NOW! BUTTON BELOW
INTRODUCTION
............... Zacke, (2004) rightly stated that the accounting community is interested with how accounting standards should be designed to achieve the objectives of financial reporting. True to this, a lot of effort have been put in by the International Accounting Standards Board (IASB) in reviewing and modifying the stipulated accounting standards to better serve the need of the users of financial reports.In view of the private sector, the Generally Accepted Accounting Principles(GAAP) was imposed on companies so that investors would have a minimum level of consistency in the financial statements they use when analyzing companies for investment purposes but the resultant discrepancies that existed in the financial reports of several nations (since each country is mandated to report its accounts in accordance with the stipulated accounting standards peculiar to it) led to the globalization of accounting standards.
Nicholas Pologeorgis 2012 examined the outcome of this discrepancies thus, “the different accounting standards of different countries brought about a lot of problems for investors trying to identify accounting reporting differences when they are considering providing funding to capital- seeking companies that follow the accounting and financial reporting in the country in which they are doing business. Robert Casey also identified international companies desire to use one set of reporting standards throughout the world, growth in capital markets (since International Financial Reporting Standards (IFRS) enhances the ability of firms to raise capital outside their borders), reduction in cost of capital and reporting cost as some of the reasons for global harmonization and convergence of accounting standards by the introduction of IFRS on the 1st of April 2001.
On July 2010,the Nigerian Federal Executive Council approved 1st January 2012 as the effective date for convergence of accounting standards in Nigeria with IFRS. Consequently, in June 2011, legislative changes were enacted under which the FRCN replaced the Nigerian Accounting Standards Board as the entity responsible for setting financial reporting standards in Nigeria (www.iasplus.com/en/jurisdictions/Africa/Nigeria). Nicholas Pologeorgis : 2012 compared GAAP to IFRS and posited that the main difference between them is the approach each takes to the standards; the GAAP is rule-based while the IFRS is a principle-based methodology.
The GAAP comprises of a complex set of guidelines attempting to establish rules and criteria for any contingency while the IFRS begins with the objectives of good reporting and then provides guidance on how the specific objectives relates to a given situation. However, it is imperative to probe the effect of this transition on the quality of financial reporting since financial statements are relied upon by corporate management, investors, stock markets, accounting professionals, accounting regulators, creditors etcetera for the purposes of investment decisions and corporate planning.
With the mandate of effecting IFRS for the private sector on the 1st of January 2012 in Nigeria, it is important to note how the transition from NGAAP to IFRS will affect the quality of financial reporting in terms its disclosure requirements and value relevance. Will these new and promising accounting standards be able to serve accounting and non-accounting users better than the NGAAP in terms of providing a higher quality of financial reports for their consumption?
Bearing in mind that the IFRS is a more summarized version of accounting standards compared to the voluminous nature of GAAP guidelines. Will IFRS for the private sector and IPSAS for the public sector aid the preparation and presentation of accounting reports in a manner that will be more relevant to accounting users on a global scale? Has the transition improved the quality of financial reports in terms of disclosure requirements, value relevance, what are some of the challenges that firms face in implementing new accounting standards? What is the effect of accounting standards on the quality of financial reporting? the provision of answers to these questions would reinforce the confidence of the users of the accounting information in the financial reports on which their decisions are based and it would curb their skepticism towards the transition from GAAP to IFRS. ........... FOR ACCESS TO THE FULL PROJECT WORK, USE THE ORDER NOW! BUTTON BELOW
TABLE OF CONTENTS
CHAPTER ONEINTRODUCTION
1.1 BACKGROUND OF THE STUDY 1
1.2 STATEMENT OF PROBLEM 3
1.3 PURPOSE OF THE STUDY 4
1.4 RESEARCH QUESTIONS 4
1.5 RESEARCH HYPOTHESIS 4
1.6 SIGNIFICANCE OF THE STUDY 4
1.7 SCOPE OF THE STUDY 6
1.8 LIMITATION OF THE STUDY 6
1.9 DEFINITION OF OPERATIONAL TERMS 6
CHAPTER TWO
LITERATURE REVIEW
2.0 INTRODUCTION 8
2.1 Conceptual Framework 8
2.1.1 Measurement of Quality Financial Reporting 8
2.1.2 THE EFFECTS OF IFRS ON DISCLOSURE REQUIREMENTS 13
2.1.3 THE EFFECTS OF IFRS ON VALUE RELEVANCE 14
2.1.4 2.2 THEORETICAL FRAMEWORK 16
2.2.1 Comparison Between GAAP and IFRS 16
2.2.2 IFRS ADOPTION IN Nigeria 19
2.2.3 IFRS AND ACCOUNTING QUALITY 24
2.2.4 Regulatory Framework of Financial Reporting in Nigeria 25
2.2.5 BENEFITS OF ADOPTING IFRS IN Nigeria 27
2.2.6 CHALLENGES TO IFRS ADOPTION IN Nigeria 30
2.3 REVIEW OF EMPIRICAL LITERATURE 32
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 INTRODUCTION 40
3.2 RESEARCH DESIGN 40
3.3 POPULATION AND SAMPLING DESIGN 41
3.4 SOURCES AND METHODS OF DATA COLLECTION 41
3.5 DATA ANALYSIS TECHNIQUE 41
3.6 VALIDITY AND RELIABILITY TEST 42
CHAPTER FOUR
DATA PRESENTATION, ANALYSES AND DISCUSSION OF FINDINGS
4.0 INTRODUCTION 44
4.1 DATA PRESENTATION 44
4.2 DATA ANALYSES AND TEST OF HYPOTHESES 53
CHAPTER FIVE
SUMMARY OF RESULTS, CONCLUSION AND RECOMMENDATIONS
5.0 INTRODUCTION 57
5.1 SUMMARY OF RESULTS 56
5.2 CONCLUSIONS 58
5.3 RECOMMENDATIONS 59
APPENDIX 65
Reference code: C067
Reference code: C067
77 Pages
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