An evaluation of IFRS Adoption and Its Impact on Financial Statement Comparability Among Nigerian Firms

An evaluation of IFRS Adoption and Its Impact on Financial Statement Comparability Among Nigerian Firms

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Background of the Study

The adoption of International Financial Reporting Standards (IFRS) has been a significant development in global financial reporting, providing a unified accounting framework designed to bring consistency and comparability across borders. Nigeria officially adopted IFRS for publicly traded companies in 2012, with a goal of improving the quality and transparency of financial reporting. The transition from local Generally Accepted Accounting Principles (GAAP) to IFRS has posed both opportunities and challenges. One of the primary benefits anticipated from IFRS adoption is the increased comparability of financial statements across different countries. However, this comparability largely depends on the consistent application of IFRS and the adequacy of training and resources for both preparers and auditors of financial statements. This study will explore the extent to which the adoption of IFRS has impacted the comparability of financial statements among Nigerian firms, considering both financial reporting outcomes and challenges faced during implementation.

Statement of the Problem

While IFRS adoption in Nigeria was intended to improve the comparability and quality of financial statements, its impact on these objectives remains unclear. The move towards IFRS has led to challenges in terms of aligning local financial reporting practices with international standards. There are concerns that the adoption of IFRS may have led to inconsistencies in financial reporting, limiting the comparability of financial statements among Nigerian firms. This study aims to examine the extent to which IFRS adoption has impacted the comparability of financial statements and the challenges faced during the transition period.

Aim and Objectives of the Study

The aim of this study is to investigate the impact of IFRS adoption on the comparability of financial statements among Nigerian firms.

The objectives are:

1. To assess the impact of IFRS adoption on the comparability of financial statements among Nigerian firms.
2. To identify the challenges faced by Nigerian firms in implementing IFRS and their effect on financial statement comparability.
3. To evaluate the role of IFRS in improving the consistency and transparency of financial reporting in Nigerian firms.

Research Questions

1. How has IFRS adoption impacted the comparability of financial statements among Nigerian firms?
2. What challenges have Nigerian firms encountered in implementing IFRS?
3. To what extent has IFRS improved the consistency and transparency of financial reporting in Nigerian firms?

Research Hypotheses

1. IFRS adoption has significantly improved the comparability of financial statements among Nigerian firms.
2. The challenges encountered in implementing IFRS have negatively impacted the comparability of financial statements.
3. IFRS adoption has enhanced the consistency and transparency of financial reporting in Nigerian firms.

Significance of the Study

This study will contribute to the understanding of how IFRS adoption affects financial statement comparability in Nigeria, providing insights for policymakers, regulators, and firms involved in the process. The findings will be valuable for improving the implementation of IFRS in Nigeria and other emerging markets with similar contexts.

Scope and Limitation of the Study

The study will focus on publicly listed firms in Nigeria that have adopted IFRS. Limitations may include challenges in accessing data from firms and variations in the quality of financial reports across different sectors.

Definition of Terms

• IFRS: International Financial Reporting Standards, a set of accounting standards developed to bring consistency to financial reporting across different countries.
• Comparability: The ability to compare financial statements across different firms or countries with the same accounting standards.
• Financial Statement: A formal record of the financial activities and position of a firm, including balance sheets, income statements, and cash flow statements.

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