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

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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.…show more content…
IFRS also assist investors in making informed financial decisions and predictions of entity’s future financial performance and give a signal of higher quality accounting and transparency. Therefore, IFRS would tend to reduce earnings manipulation, enhance stock market efficiency and positively impact on entity’s’ stock returns and stock related financial performance measures. Nigeria started considering adopting IFRS in 2007. In fact, the CBN actually disclosed that Banks should adopt IFRS from 2008 while the SEC advertised 2009. There were several reasons for this deep thought. First, there was the growing evidence that the world economies are even more interconnected and symbiotic than anyone really understood. Judging from the global financial crisis, it is obvious to all now that nations have strained the present system of differential national accounting standards to its limit. Nations that are truly desirous of moving forward are now aiming to free their countries from the limits of the present system. Second, Nigerian Capital market would witness improved efficiency, enhanced credibility as well as a reduction in the barriers to flow of capital. Third, it was observed that Nigeria indeed is part of globalization. Prior to the time of considering adopting IFRS, a number of Nigerian companies have raised capital from international stock markets and some others have

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