Mandatory Adoption of International Financial Reporting Standards (IFRS) in Nigeria: The Unresolved Institutional Question

Abstract

Preeminently, the objective of the paper is to examine the perceived impact of Nigerian institutional infrastructure (i.e.
Educational Institution, Professional Accounting Bodies, Legal Framework, SEC and NASB or FRCN) on the mandatory
adoption of IFRS, which took effect from January 2012. The study adopts the questionnaire survey method to seek
respondents’ views on the subject matter. One of the major perceived differences between IFRS and Nigerian SAS is that the
former allegedly provides more discretion (i.e., less specific standards and less implementation guidance). Although more
reporting discreetness is not necessarily a challenge, firms’ reporting incentives, which are shaped by Nigerian institutional
framework, play a foremost role in how organizations would apply the discernment under IFRS. We therefore employed
Multiple Regression techniques as well as One Way Repeated Measure Analysis of Variance, in testing the two hypotheses in
the paper. The result shows that four of the five institutions are ready and strong enough to support the mandatory adoption of
IFRS.We recommended interalier, that the capacity of regulators (Corporate Affairs Commission,Securities and Exchange
Commission, National Insurance Commission, Central Bank of Nigeria to mention but a few) must be strengthened so as to
enable them to effectively deal with accounting and financial reporting practices of the regulated concerns, so that the
mandatory adoption of IFRS in Nigeria, does not become a mere labeled or nominal one.