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Challenges with IFRS in Nigeria highlight integration problems

9th April 2014

MGI World Challenges with IFRS in Nigeria highlight integration problems

Delays to company reporting schedules in Nigeria have highlighted some potential problems with new countries adopting International Financial Reporting Standards (IFRS). Around four in five companies listed on the Nigerian Stock Exchange (NSE) are struggling to prepare their results in time because of the new regime.

Listed companies and significant public interest entities that have mandated regulatory reporting adopted IFRS effective January 1st, 2012. All other companies were required to adopt in 2013, while small and medium-sized enterprises (SMEs) will be required to adopt in 2014.

But Nigeria’s Business Day newspaper reports 22 companies listed on the NSE have applied for an extension to the deadline for filing reports covering the period up to December 31st 2013. It is thought that these firms now have until April 30th to submit their reports.

The situation highlights the problems associated with converging local GAAP with IFRS not only in Nigeria, but across the developing world as new nations adopt the standard.

IFRS has become the de facto global language of accounting, but many in Africa are still not fully conversant. A University of Johannesburg report in 2012 warned of the “many challenges that continue to hinder the adoption of IFRS in the majority of countries on the African continent”.

Things have moved on - many countries are now using IFRS for listed companies at the very least, though adoption for SMEs remains low. But as the Nigerian example highlights, full compliance with the standard is not easy even once it has been mandated by government.

Companies not reporting their results on time may not be a major issue long-term, but a failure to comply with IFRS could be holding back development. As the UJ report suggests, those countries not using the IFRS language are not involved to their full potential. “The problem is that most of the countries on the African continent have yet to become part of this global conversation,” the authors stated. As discussed previously, getting Africa's financial reporting and audit procedures right is vital for the continent's economic health.

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