Awareness and Application of International Financial Reporting Standard among Small and Medium Enterprises in NorthCentral Nigeria

Abiola Abosede Solanke; Kabiru Dandago Isa; Paul Femi Fashagba

Awareness and Application of International Financial Reporting Standard among Small and Medium Enterprises in NorthCentral Nigeria

Abiola Abosede Solanke, Kabiru Dandago Isa, Paul Femi Fashagba

Abstract

Background: Studies in Nigeria have focused on different dimensions of the International Financial Reporting Standard (IFRS) adoption. However, insufficient attention has been paid to the level of IFRS awareness and application among Small and Medium Enterprises (SMEs) in Northern Nigeria particularly in the North-Central zone. Objective: To examine the extent of awareness and application of IFRS by SMEs in North- Central Nigeria. Methods: The descriptive survey design was adopted for the study. Samples were drawn from the list of registered SMEs in three randomly selected States, namely Kwara, Kogi, and Niger States. Using the Cochran (1977) sample size determination formula, a sample size of 307 was determined for the study. A multi-stage random sampling technique was employed to select eligible SMEs owners. Data collection was carried out by self-administered questionnaire. The dependent variable is financial reporting quality. The independent variable in the study is the adoption of IFRS of SMEs. The Epidata computer software was used for data entry. The statistical analyses were performed at the univariate, bivariate and multivariate levels using Stata version 12. Results: Findings showed that 60.2% of the SMEs are not aware of IFRS; 67.5% of the entities do not prepare any financial statements based on IFRS for SMEs; 2.9% prepared statement of financial position only; and 4.4% prepared statements of financial position and at least one other type of account required by the IFRS for SMEs. The total adoption of IFRS for SMEs that is preparation of complete set of financial position was the only variable that resulted in a positive change in financial reporting quality (4 ? = 1.5614, p<0.05). Conclusions: Poor attitude is the underlying barrier to the adoption of IFRS

Keywords

Awareness; attitudeIFRS; SMEsfinanciaL

References

Ailmen, I. O., & Akande, A. O. (2012). International financial reporting standard; Benefit Obstacles and Intrigues for Implementation in Nigeria. Research Journal of Finance and Accounting, 3 (10), 143-151. Madawaki, A. (2012). Adoption of IFRS in Developing Country the case of Nigeria. International journal of business and management 7, 3, 15-160 Adekoye, O. (2011). Similarity and difference: International financial reporting standard and Nigeria general accepted accounting principles. Retrieved from www.pwc.com/ng/en/publications/ifrs-vs-nga Adegoke, A. J., & Samson, O. K. (2013). The relevance of IFRS in the preparation and presentation of financial statement in Nigeria. Research Journal of Finance and Accounting 4. 7 Cochran, W. G. (1977). Sampling Techniques (Third edition). London: John Wiley and Sons Demaki, G. O. (2013). Prospects and challenges of international financial reporting standards to economic development in Nigeria. Global Journal of Management and Business Research, 13, 1, 69-74 Ezeani, N. S., & Oladele, R. (2012). Adoption of international financial reporting standards (IFRS) to enhance financial reporting in Nigeria universities; ArabianJjournal of Business and Management review.2, 3; 70-85 Fasina, H. T., & Adegbite, T.A. (2014). Empirical analysis of the effect of IFRS adoption on accounting practice in Nigeria. Achieves of Business Research 2 .2 Gbadegesin, A., Olopoenia, R., & Jerome, A. [Eds.] (2005). Statistics for the Social Sciences. Ibadan: Ibadan University Press. Gupta, S. C. (2011). Fundamentals of Statistics (Sixth Revised and Enlarged Edition). Mumbai, India: Himalaya Publishing House. Izuora, C. (2013). Nigeria, international financial reporting standard for small and medium Scale entrepreneur, Non- Negotiable. Leadership (Abuja) Retrieved from allAfrica.com on 1/4/2014 Iheanyi, O. A. (2012). Managing the challenges of IFRS transition, Regulator’s, perspective Financial Reporting Council of Nigeria, 16th August Kanu, C., Onuoha, N. E., & Gabriel, I. (2014). SMEs in Nigeria and adoption of IFRS, An Evaluation. Journal of Economics and Finance Volume 4, Issue 2 Kythreotis, A. (2014). Measurement of Financial Reporting Quality based on IFRS Conceptual Framework’s Fundamental Qualitative Characteristics. European Journal of Accounting Finance and Business, 2,3, 4-10. Mosisa, T. (2011). Accounting practice of small and medium sized entrepreneurs and its effect on access to finance in Addis Ababa. A thesis submitted to the school of graduate studies of Addis Ababa University in partial fulfillment of the requirement for the degree of Masters of Science in Accounting and Finance. Olatunji, (2013). The impact of accounting system on the performance of small and medium Scale enterprises in Nigeria-A survey of SMEs in Oyo state- Nigeria International Journal of Business Management. 2 , 9 . 13-17 Spiegel, M. R., & Stephens, L. J. (2008). Schaum’s Outlines of Statistics (Fourth Edition). USA: McGraw-Hill Companies. Yahaya, K. A., Osemene, O. F., & Salman, R. T. (2011). Improving the accounting Practice adopted by owners of small and medium scale enterprises in Kwara State, Nigeria: British Journal of Economics, Finance and Management Sciences. 2 ,1, pp. 71-81 Zare, I., Aghjehkandi, M. O., & Aghjehkandi, G. O. (2012). Qualitative Characteristics of Accounting Information in Reported Values of Goodwill and Intangible Assets (Case Study of the Stock Exchange of Iran). Middle-East Journal of Scientific Research, 11, 1, 32-38.

Awareness and Application of International Financial Reporting Standard among Small and Medium Enterprises in NorthCentral Nigeria

Abstract

Keywords

References

More Articles from IIARD INTERNATIONAL JOURNAL OF ECONOMICS AND BUSINESS MANAGEMENT