The Adopting Process of International Financial Reporting Standard (Ifrs) on a Developing Economy

5488 Words Sep 14th, 2012 22 Pages
Abstract
The study focused on the adoption process of International Financial Reporting Standards (IFRS) on a developing economy, with particular reference to Nigeria. The paper is based on the data obtained from literature survey and archival sources in the context of the globalization of International Financial Reporting and the adoption of International Financial Reporting Standards (IFRS).Nigeria has embraced IFRS in order to participate in the benefits it offers, including attracting foreign direct investment, reduction of the cost of doing business, and cross border listing. In implementing IFRS Nigeria will face challenges including the development of a legal and regulatory framework, awareness campaign, and training of personnel.
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All Other Public Interest Entities are expected to mandatorily adopt the IFRS for statutory purposes by January 2013, and Small and Medium-sized Entities shall mandatorily adopt IFRS by January 2014.
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IFRS are accounting standards issued by the International Accounting Standards Board (IASB), an independent organization registered in the United States of America but based in London, United Kingdom. They pronounce financial reporting standards that ideally would apply equally to financial reporting by public interest entities worldwide. Between 1973 and 2000, international standards were issued by the IASB’s predecessor organization, the International Accounting Standards Committee (IASC), a body established in 1973 by the professional accountancy bodies in Australia, Canada, France, Germany, Japan, Mexico, Netherlands, United Kingdom and Ireland, and the United States of America. During that period, the IASC’s pronouncements were described as "International Accounting Standards" (IAS). Since April 2001, this rule-making function has been taken over by a newly constituted IASB.

The implementation of IFRS, as observed by world accounting standards setters, would reduce information asymmetry and subsequently smooth the communication between managers, shareholders, lenders and other interested parties, resulting in lower agency costs. Lower information

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